That Only Large,well-Established Corporations Have Access to Securities Markets

question 20

Multiple Choice

That only large,well-established corporations have access to securities markets

• A)explains why indirect finance is such an important source of external funds for businesses.
• B)can be explained by the problem of moral hazard.
• C)can be explained by government regulations that prohibit small firms from acquiring funds in securities markets.
• D)explains why newer and smaller corporations rely so heavily on the new issues market for funds.

---

Definitions:

Consumer Credit Contract

A legal agreement between a borrower and a lender where the lender provides the borrower with credit for personal, family, or household purposes.

Misdirected Payment

Misdirected payment occurs when a payment is sent to an incorrect party or destination, either due to error or misunderstanding.

Bankruptcy

A lawful method that enables individuals or enterprises in financial distress to pursue exemption from part or all of their financial liabilities.

Shelter Principle

A legal concept in property law that allows a person who purchases goods from a non-owner to acquire valid title under certain conditions, provided the seller had derivative authority to sell.