Which of the following can be described as involving direct finance? A. People buy shares in a mutual fund. B. People buy shares of common stock in the primary markets. OC. A corporation buys a short-term corporate security in a secondary market. O D. A corporation takes out loans from a bank.
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- Which of the following can be described as involving indirect finance? a. People pay premiums to an insurance company b. A corporation issues new shares to people c. People lend money to their friends d. People buy bonds from companiesWhich of the following can be described as involving direct finance? O A. People buy shares in a mutual fund. B. A corporation buys commercial paper issued by another corporation. OC. A pension fund manager buys commercial paper from the issuing corporation. D. Both A and B of the above OE. Both B and C of the above.The investment banks collect money from public, because O a. Business sells products. O b. Business issues shares and debentures. O C. Business wants to make profits. O d. Banks issue shares and debentures.
- Determine whether each of the following is direct financing or indirect financing. : investing in a mutual fund Direct Financing? Indirect Financing? taking out a loan at a commercial bank Direct Financing? Indirect Financing? selling stock on the stock market Direct Financing? Indirect Financing? selling bonds on the capital market Direct Financing? Indirect Financing?1. Which of the following is a function of every financial market? A) It determines the level of interest rates. B) It allows common stock to be traded. C) It allows loans to be made. D) It channels funds from lenders-savers to borrowers-spenders. 2. Securities are for the person who purchases them, but they are for the person/firm who sells them. A) assets; liabilities B) liabilities; assets C) income; liabilities D) liabilities; expenses 3. Which of the following is/are money market instrument(s)? A) Negotiable certificates of deposits B) Common stock C) T-bonds D) 4-year maturity corporate bond 4. Who has voting rights at a shareholders' meeting? A) All common stock owners. B) Common stock owners who own more than 1% of the company. C) Only the company's managers. D) All preferred stock owners. 5. These are investments where shareholders become the owners of the portfolio of the account. These portfolios of securities could be made up of equity securities or debt securities. A)…The following are examples of debt financing EXCEPT: a. Selling an ownership stake in the company b. Issue bonds repayable with interest c. Taking a loan from the bank d. Taking a loan from a family member
- Title Every financial market has the following characteristic: Description Function of Financial Markets 1) Every financial market has the following characteristic: A) It determines the level of interest rates. B) It allows common stock to be traded. C) It allows loans to be made. D) It channels funds from lenders-savers to borrowers-spenders. 2) Financial markets have the basic function of A) getting people with funds to lend together with people who want to borrow funds. B) assuring that the swings in the business cycle are less pronounced. C) assuring that governments need never resort to printing money. D) providing a risk-free repository of spending power. 3) Financial markets improve economic welfare because A) they channel funds from investors to savers. B) they allow consumers to time their purchase better. C) they weed out inefficient firms. D) eliminate the need for indirect finance.Which of the following can be considered as financial institutions in a good financial system? a. Treasuries b. Stock Exchanges c. Banks d. AllGiven a financial institution that make money in three ways: interest income, interest income, and investment income, what are some ways a bank can capitalize off of non interest income. Give examples.
- True or False 1. The holder of the bond indenture is receiving interest income on a regular basis. 2. Loan from a bank is interest-bearing. 3. When a corporation raises capital through equity financing, it results to an increase in its equity. 4.1 Which of the following is least likely to be a financial intermediary? A. Finance companies 8, Mutual funds C. Pension funds D. Investment banks E. Savings banks 2 Which of the following do not have corporate stock ownership? A. Commercial banks B. Savings and loan associations C. Savings banks D. Credit uniong O All of the above 3. A financial institution that raises funds by issuing shares to the public and invests the proceeds in a diversified portfolo for a management fee is: A. Banks B. Pension FundyC)Mutual Funds D. Financn companies E. None of the above - 4. One of the following types of financial instruments derive their value from other instruments (underlying assets) A. Cash instruments B. Equity instruments O Derivative instruments D. Debt instrumentsThe financial markets play an important role in channeling funds from savers to borrowers. Which of the following illustrates this function of financial markets? Investors purchase assets like real estate and gold from other investors. Investors purchase capital goods which are used in production by borrowers. Investors deposit funds into interest-bearing accounts which are then loaned to borrowers. Investors purchase securities that are issued by firms and governments.