If your firm primarily borrows from commercial banks, then it primarily accesses the capital markets through:
A) direct financing.
B) indirect financing.
C) a legal loophole that allows all commercial banks the ability to underwrite securities.
D) none of the above.

Question

Quizplus · Accepted Answer

If a firm primarily borrows from commercial banks, then it is primarily accessing capital through indirect financing, which involves the use of financial intermediaries such as banks to obtain funds from the capital markets. Direct financing, on the other hand, involves the firm going directly to investors to issue securities or obtain loans. The choice C is incorrect because there is no such legal loophole that allows all commercial banks the ability to underwrite securities.

If Your Firm Primarily Borrows from Commercial Banks, Then It