1a). Every fmancial market has the following characteristic. A) It channels funds from lenders-savers to borrowers-spenders. B) It allows common stock to be traded. C) It allows loans to be made. D) It determines the level of interest rates. 1b). The most important lender-savers in the U.S. economy are A) governments. B) businesses. C) foreigners. D) households. 1c) Which of the following can be described as direct finance? A) You take out a mortgage from your local bank. B) You buy shares of common stock in the secondary market. C) You borrow $2500 from a friend. D) You buy shares in a mutual fund. 10) 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 a short-term corporate security in a secondary market. D) People buy shares of common stock in the primary markets. le) Which of the following statements about the characteristics of debt and equity is FALSE? A) They can both be long-term fmancial instruments. B) They can both be short-term fmancial instruments. C) They both involve a claim on the issuer's income. D) They both enable a corporation to raise funds.

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