That only large,well-established corporations have access to securities markets
A)explains why indirect finance is such an important source of external funds for businesses.
B)can be explained by the problem of moral hazard.
C)can be explained by government regulations that prohibit small firms from acquiring funds in securities markets.
D)explains why newer and smaller corporations rely so heavily on the new issues market for funds.

Question

Quizplus · Accepted Answer

Indirect finance is crucial for businesses, especially smaller ones, because direct access to securities markets is often limited to larger, well-established corporations. This makes banks and other financial intermediaries key sources of external funds for these smaller entities.

That Only Large,well-Established Corporations Have Access to Securities Markets