Which of the Following Can Be Described as Involving Indirect

question 104

Multiple Choice

Which of the following can be described as involving indirect finance?

• A)You make a loan to your neighbor.
• B)You buy shares in a mutual fund.
• C)You buy a U.S. Treasury bill from the U.S. Treasury at Treasury Direct.gov.
• D)You purchase shares in an initial public offering by a corporation in the primary market.

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Definitions:

Industry Structures

The characteristics that define the competitive environment of a market, including the number and size of competitors, product differentiation, and ease of market entry.

Economic Profit

Total revenues minus explicit and implicit costs, representing the return on investment beyond the normal expected return.

Normal Profit

The level of profit that is necessary for a company to remain competitive in the market, often seen as the minimum acceptable return.

Allocative Inefficiency

A situation where resources are not allocated optimally, leading to a loss of economic efficiency.