Economics homework help??

Question

1. explain the tradeoff between equityand borrowing as forms of investment

2. why does australia rely on foreign investment?

3. what is the difference between equity and debt securities?

can anyone help with these questions?

thanks:)

Answer 1

1. The more equity you have in your home the less you need to borrow.

2. Income for business and govenment and keeping the balance of trade figures favourable.

3.A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings. Also known as shares, or equity. Debt Securities are IOUs created through loan-type transactions-commercial paper, bank CDs, bills, bonds, and other instruments.

Answer 2

#1 turns out to be a major issue, discussed at business schools all over the world.

http://www.informaworld.com/smpp/content...

Here are some light papers on the issue for small businesses:

http://smallbusiness.findlaw.com/banking...

http://finance.yahoo.com/how-to-guide/ca...

And an intro for the larger corporate world:

http://www.econlib.org/Library/Enc/Corpo...

Note the comment that the assumptions of the M&M theory do not match the real world: that is, debt and equity do have different tax implications, are perceived differently by investors, etc.

As for #2 and #3, asking 3 completely independent questions in one post is not good form.