Securities markets allocate funds more readily to _____

Question

Quizplus · Accepted Answer

Securities markets allocate funds more readily to successful firms as they are perceived to have a lower risk of default and a higher potential for growth and profitability. Firms in financial difficulty may find it more challenging to obtain financing or may have to pay a higher interest rate to compensate for their higher level of risk. Both firms in the stock and bond markets may be successful, so these options are not mutually exclusive. However, the allocation of funds depends on the specific performance and risk profile of each individual firm.

Securities Markets Allocate Funds More Readily to _____