A security is an instrument that represents a financial liability to the holder and a financial asset to the issuer. The role of financial markets is to bring savers and users of funds together at the least possible cost and inconvenience. The depreciable life of an asset for tax purposes is determined by the years the owner expects to use it. Equity financing has a tax advantage since dividends paid out to shareholders reduce a firm's taxable income.
Inflation expectations affect interest rates.
Used by permission. All rights reserved.