A movie production house makes a gross profit of $10 million from a movie release.If the company spends $4 million, including taxes and all expenses, then it has $6 million in profits.The company can invest the $6 million in a mutual fund, investing in stocks and bonds all over the world.Making such an investment is riskier than keeping the $6 million in a savings account.The financial officer hopes that over the long term, the investment will yield greater returns than cash holdings or interest on a savings account.This is an example of a form of:

Question

Quizplus · Accepted Answer

This is an example of direct finance, where the company is investing its profits directly in a mutual fund. Indirect finance involves using financial intermediaries, such as banks or investment funds, to invest on one's behalf. Currency swap, conversion, and cross rate are unrelated to this scenario.

A Movie Production House Makes a Gross Profit of $10