Question

The followings are economic activities involving either direct finance or indirect finance. fill the blank from the following: direct finance; indirect finance.

A corporation buys commercial paper issued by another corporation. This is [B];

A pension fund manager buys commercial paper from the issuing corporation. This is [C];

An insurance company buys shares of common stock in the over-the-counter markets. This is [D];

People buy shares in a mutual fund. This is [E];

A corporation takes out loans from a bank. This is [F];

A startup company borrows $100,000 from an individual investor for two years with  $10,000 interest payment per year. This is [H]

Answer 1

A corporation buys commercial paper issued by another corporation. This is [B]; Direct Finance.

A pension fund manager buys commercial paper from the issuing corporation. This is [C]; Direct finance

An insurance company buys shares of common stock in the over-the-counter markets. This is [D]; Indirect finance

People buy shares in a mutual fund. This is [E]; Direct finance

A corporation takes out loans from a bank. This is [F]; Direct finance

A startup company borrows $100,000 from an individual investor for two years with  $10,000 interest payment per year. This is [H] Indirect finance