Which of the following statements concerning external sources of financing for nonfinancial businesses in the United States are TRUE?
A)Stocks are a far more important source of finance than are bonds.
B)Stocks and bonds,combined,supply less than one-half of the external funds.
C)Financial intermediaries are the least important source of external funds for businesses.
D)Since 1970,more than half of the new issues of stock have been sold to American households.

Question

Quizplus · Accepted Answer

According to data from the Federal Reserve, stocks and bonds combined supplied less than half of the external funds for nonfinancial businesses in the US. Other sources include bank loans, commercial paper, and trade credit.

(Note: A is false, as bonds are actually a more important source of finance than stocks. C is false, as financial intermediaries such as banks and insurance companies are a significant source of external funds for businesses. D is false, as data from the Federal Reserve shows that only about 15% of new issues of stock were sold to households in the period from 1970-2017.)

Which of the Following Statements Concerning External Sources of Financing