2a) Which of the following statements about the characteristics of debt and equities is TRUE? A) They can both be long-term fmancial instruments B) Bond holders are residual claimants. C) The income from bonds is typically more variable than that from equities. D) Bonds pay dividends. 2b) Which of the following benefits directly from any increase in the corporation's profitability? A) a bond holder B) a commercial paper holder C) a shareholder D) a T-bill holder 2c) A financial market in which previously issued securities can be resold is called a market. A) primary B) secondary C) tertiary D) used securities 2d) A corporation acquires new funds only when its securities are sold in the A) primary market by an investment bank B) primary market by a stock exchange broker. C) secondary market by a securities dealer. D) secondary market by a commercial bank 2e) An important function of secondary markets is to A) make it easier to sell financial instruments to raise funds. B) raise funds for corporations through the sale of securities. C) make it easier for governments to raise taxes. D) create a market for newly constructed houses.

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