Question

2:which of the following can be described as direct finance? a: you can take out a mortgage from your local bank. b: you can borrow $2500 from a friend. c: you buy shares of common stock in the secondary market. d: you buy shares in a mutual fund.

3: with_____ finance, borrowers obtain funds from lenders by selling them securities in the financial markets. a: active b: determined c: indirect d: direct

4: financial markets improve economic welfare because of a: they channel fund from investors to savers b: they allow consumers to time their purchase better c: they weed out inefficient firms d: they eliminate the need for direct finance

5: which of the following can be described as involving direct finance? a: a corporation takes out loans from a bank b: people buy shares in a mutual fund c: a corporation buys short-term corporate security in a secondary market. d: people buy shares of common stock in the primary markets

6: which of the following can be described as involving indirect finance? a: you make a loan to your neighbor b: a corporation buys a share of common stock issued by another corporation in the primary market. c: you buy the U.S. Treasury bill from the U.S. Treasury at TreasuryDirect gov. d: you make a deposit at a bank.

7: with direct finance, funds are channeled through the financial market from the_____ directly to the______. a: savers, spenders b: spenders, investors c: borrowers, savers d: investors, savers

Answer 1

2. take oyt mortagage from your local bank and buy shares in a mutual fund and buy a shares of a common stcok in the secondary market is indirect finance. so borrowing of $2,500 from a friend is direct finance.

so option B is correct.

3. Direct finace means borrows getting funds from lenders by selling them securities in the markets. so correct option is 'D'

4. Financial markets improve economic welfare because of they allow consumers to time their purchase better. so the correct answer is option 'B'

5.as discussed first an dsecond are indirect finance. people buys shares of common stock in secondary market is also indirect finance. so people buys shares of a common stock in the primary market is direct finance

so option 'D' is correct.

6. all are direct finance expcept you make a deposit at a bank. This is indirect finance.

so option 'D' is correct

7. With direct finace funda are channeled through the financial market form the savers directly to the spenders