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.

Question

Quizplus · Accepted Answer

Direct finance involves the transfer of funds directly from savers to borrowers. When people buy shares of common stock in the primary markets, they are providing funds directly to the corporation, which can then use those funds for investment or other purposes. Options A, B, and C involve indirect finance, where funds are channeled through financial intermediaries such as banks or mutual funds.

Which of the Following Can Be Described as Involving Direct