With Regard to External Sources of Financing for Nonfinancial Businesses

question 48

Multiple Choice

With regard to external sources of financing for nonfinancial businesses in the United States,which of the following are accurate statements?

• A)Marketable securities account for a larger share of external business financing in the United States than in Germany and Japan.
• B)Since 1970,most of the newly issued corporate bonds and commercial paper have been sold directly to American households.
• C)Direct finance accounts for more than 50 percent of the external financing of American businesses.
• D)Smaller businesses almost always raise funds by issuing marketable securities.

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Definitions:

Inventory Purchasing

The process of acquiring goods and materials that a company intends to sell in its normal business operations.

Sporting Goods Store

A retail business specializing in the sale of sports equipment and related items for various physical activities and sports.

Lump-sum

A one-time payment executed at a specific moment, rather than several payments spread out over a period.

Installments

A method of payment where the total cost is divided into smaller, periodic payments over a set period of time.