"Information problematic" borrowers must usually go the __________ finance route and issue __________ securities.

Question

Quizplus · Accepted Answer

"Information problematic" borrowers typically have difficulty obtaining financing through direct channels, such as bank loans or publicly traded securities. Instead, they may turn to indirect financing sources, such as venture capitalists, private equity firms, or angel investors, who are willing to provide capital in exchange for an ownership stake in the company. These investors typically prefer non-traded securities, such as preferred stock, convertible bonds, or warrants, which offer them the potential for higher returns and greater control over the borrower's operations. Therefore, the best option is D, indirect financing through non-traded securities.

"Information Problematic" Borrowers Must Usually Go the __________ Finance Route