If you borrow $5,000 from your bank to purchase shares of Snap from your cousin Vinny,this is an example of obtaining ________ financing and purchasing the stock in a ________ market.

Question

Quizplus · Accepted Answer

Borrowing money directly from the bank to purchase shares is an example of direct financing because you are directly obtaining funds from a lender. Purchasing shares from your cousin Vinny, rather than from the issuing company, means you are buying the shares in the secondary market, where securities are traded among investors without raising new capital for the issuing company.

If You Borrow $5,000 from Your Bank to Purchase Shares