2360.1 - Question 1 a Financial assets The asset that one...

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Question 1 a. Financial assets The asset that one individual has lent to another. For example, money on deposit from bank for Canadian households and the market value of investment in shares are both financial assets. b. Real assets The tangible things that compose personal and business assets are real assets. For example, land of house and equipment to produce products are belonging to real assets. c. Agency cost The cost associated with agency problems which arise due the potential divergence of interest between managers, shareholders, and creditors. Manager avoid high risks project to make decisions. d. Primary market Market that involve the issue of new securities by the borrower in return for cash from investor. For example, companies sell their new shares to public and government sells issues of bonds. e. Secondary markets Trading environments that permit investors to buy and sell existing securities. For example, the place where you can buy and sell shares issued by PepsiCo based on the company’s share price.
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