Question: Explain the difference between primary and secondary capital markets and discuss why the existence of secondary markets is important. What are the reasons why debt

  1. Explain the difference between primary and secondary capital markets and discuss why the existence of secondary markets is important.
  2. What are the reasons why debt capital in a firm typically has a lower cost of capital than does equity capital in the same firm? Will debt capital in a firm always have a lower cost of capital than equity capital in a different firm? Why or why not?
  3. Explain the difference between systematic risk and non-systematic risk and support your answer with a diagram and examples as appropriate.

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