Abercrombie & Fitch wants to raise $8 million to finance the construction of a new store, and the company wishes to raise the funds through direct finance.Which of the following methods could it use?

Question

Quizplus · Accepted Answer

Abercrombie & Fitch could choose either to sell $8 million in bonds or issue $8 million in stocks as both methods involve direct finance. Borrowing $8 million from a bank would involve indirect finance as a financial intermediary (the bank) would be involved. Therefore, option D is the best choice as it allows the company to choose the most suitable method for raising funds.

Abercrombie & Fitch Wants to Raise $8 Million to Finance