Which of the following is not one of the eight basic facts about financial structure?
A) Debt contracts are typically extremely complicated legal documents that place substantial restrictions on the behavior of the borrower.
B) Indirect finance, which involves the activities of financial intermediaries, is many times more important than direct finance in which businesses raise funds directly from lenders in financial markets.
C) Collateral is a prevalent feature of debt contracts for both households and businesses.
D) New security issues is the most important source of external funds to finance businesses.

Question

Quizplus · Accepted Answer

New security issues are not one of the eight basic facts about financial structure. The eight basic facts are: (1) Debt contracts are legal documents that place substantial restrictions on the behavior of the borrower, (2) Debt contracts are complicated, (3) Indirect finance is many times more important than direct finance, (4) The financial system is composed of many different institutions, (5) Financial intermediaries, such as banks and insurance companies, are the most important source of external funds, (6) Collateral is a prevalent feature of debt contracts, (7) Debt contracts are very important source of funds for corporations, and (8) The stock market is a relatively minor source of external funds for corporations.

Which of the Following Is Not One of the Eight