Financial Intermediation Exists, in Part, Because

question 29

Multiple Choice

Financial intermediation exists, in part, because:

• A) financial markets work so well.
• B) direct finance through stocks and bonds is the dominant form of financing.
• C) transaction costs of financial intermediation is always higher than direct finance.
• D) the transaction costs associated with direct finance can at times be prohibitive.

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Definitions:

Non-sufficient Funds

A situation where a bank account does not have enough money to cover a transaction, often resulting in a fee.

Uncollectible Account

An account receivable that is deemed unrecoverable from a debtor, often written off as a bad debt by the company.

Purchases Journal

A specialized accounting journal used to record all purchase transactions, typically for inventory or supplies.

Open Transaction

Any financial transaction that has been initiated but not yet completed or settled.