What has been the most popular way of obtaining new financing by Canadian business in recent years? (a) (b) (c) (d) Bonds Common shares Leases Sale-and-leaseback arrangements Securitization of assets (e) 33. Which of the following investments would investors generally view as the riskiest? (a) (b) (c) (d) (e) Bonds Mortgages Preferred shares Common shares Leases 34. What is an advantage to a business when financing through an issue of preferred shares rather than bonds? (a) (b) Preferred shares trade on stock exchanges as well as OTC (over the counter) making preferred share issues always easier to place. A company is legally obligated to pay interest to its bondholders. Dividends to preferred shareholders can be deferred indefinitely Preferred shareholders demand a lower rate of return than bondholders. Dividends paid to preferred shareholders can be written off against taxes at a higher rate than interest payments to bond holders. Preferred shareholders demand a lower value of assets to be pledged against the capital they provide to the business than bondholders do. (d) (e) 5. Which of the following is an example of a primary capital market? (b) (c) (d) (e) The government issues new securities to raise short term funds. Forward contracts and derivatives are bought and sold. Shares that have been previously purchased are offered for sale to others. Equity shares held in another company are sold. Dealers trade in shares not listed on the stock exchanges