The concept of adverse selection helps to explain Group of answer choices A) why indirect finance is more important than direct finance as a source of business finance. B) which firms are more likely to obtain funds from banks and other financial intermediaries, rather than from the securities markets. C) why direct finance is more important than indirect finance as a source of business finance. D) only A and B of the above. E) only A and C of the above.

Which of the following is incorrect about the Pecking Order Theory? A.Firms with high ratios of fixed assets to total assets tend to have higher debt ratios.This evidence exclusively supports the pecking order theory B.When external finance is required,firms issue debt first and equity as a last resort C.Most profitable firms borrow less not because they have lower target debt ratios but beause they don't need external finance D.Firms prefer internal finance since funds can be raised without sending adverse signals

Thoroughly discuss why the asymmetric information is an obstacle to the direct finance? Give examples of moral hazard and adverse selection problems and possible solutions.

Discuss how the free-rider problem aggravates adverse selection and moral hazard problems in financial markets.

Which of the following explains why relative valuation is preferred over intrinsic valuation?  a. It requires the collection of data regarding similar firms, thus this method is time-consuming.b.It reflects historical costs that are grounded with facts and not based on assumptions c. Individuals with minimal accounting and finance knowledge can apply this method. d.It uses assumptions that are more cash-flow based.

1.Which of the following is not something that you would consider when evaluating the optimal capital structure? d. Security Rating. b. EBIT-EPS Analysis. a. Agency Costs. f. Neither the second nor fourth answer is correct. c. Taxes. e. All of the above are considered when determining the optimal capital structure. 2.Which of the following is an argument for the relevance of dividends? b. Reduction of uncertainty. a. Informational content. c. Some investors' preference for current income. d. All of the above. 3.All of the following are true of stock splits EXCEPT: a. Market price per share is reduced after the split. d. Proportional ownership is unchanged. b. The number of outstanding shares is increased. c. Retained earnings are changed.

What are the disadvantages of the financial intermediaries and the negative ways they can impact the economy?

I. Explain the tradeoff between the costs of having too much liquidity on the one hand and financial distress and insolvency on the other hand. II. What gives rise to, or causes, each. III. Give an example explaining both.

Which of the following statements is incorrect? Select one: A. It is possible for markets to be efficient with respect to some information and inefficient with respect to other information B. It is possible for some markets to be more efficient than others C. The market is likely to be more efficient with respect to companies where there is greater analyst following D. The market is totally efficient with respect to companies providing regular dividends to investors

What is "Intermediation" and why do we use Financial Intermediaries, instead of direct finance, for the most part?