Alco Electronics needs to borrow money to pay for a large capital investment. It is deciding between getting a bank loan and issuing bonds. Which statement is true about the options Alco is considering?
A) A bank loan is part of a loanable funds market, but issuing bonds is not.
B) A bank loan is borrowing from many savers, while issuing bonds is not.
C) A bank loan is borrowing a large amount from one lender, while issuing bonds is borrowing small amounts from many lenders.
D) Issuing bonds is part of the loanable funds market, but a bank loan is not.

Question

Quizplus · Accepted Answer

A bank loan typically involves borrowing a large amount from a single lender (the bank), whereas issuing bonds involves borrowing smaller amounts from many individual investors or institutions.

Alco Electronics Needs to Borrow Money to Pay for a Large