For each of the following countries, identify the single most important (largest) and least important (smallest) source of external funding: United States; Germany; Japan; Canada. Comment on the similarities and differences among the countries’ funding sources.
Answers
Answer:
Step 1 of 2
Step 1 of 2The largest source of external funding for the United States is nonbank loans, while that for Germany, Japan, and Canada is bank loans. The smallest source of external funding for the U.S., Japan, and Canada is new issues of equity (stocks). For Germany, its smallest source is marketable debt securities (corporate bonds and commercial paper).
Step 1 of 2The largest source of external funding for the United States is nonbank loans, while that for Germany, Japan, and Canada is bank loans. The smallest source of external funding for the U.S., Japan, and Canada is new issues of equity (stocks). For Germany, its smallest source is marketable debt securities (corporate bonds and commercial paper).Step 2 of 2
Step 1 of 2The largest source of external funding for the United States is nonbank loans, while that for Germany, Japan, and Canada is bank loans. The smallest source of external funding for the U.S., Japan, and Canada is new issues of equity (stocks). For Germany, its smallest source is marketable debt securities (corporate bonds and commercial paper).Step 2 of 2Stocks act as the smallest source of funding for three of the listed countries because the entity issuing the stocks is selling ownership. Banks are the most important source of eternal funds used to finance business and this describes why Germany, Japan, and Canada turn to bank loans as their primary source of external funding. These differences in funding exist due to the ways the various financial systems are set up. For example if interest payments on debt securities are high, then firms would stray away from using such securities as a source of primary funding.
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