Which of the Following Statements Concerning External Sources of Financing

question 16

Multiple Choice

Which of the following statements concerning external sources of financing for nonfinancial businesses in the United States are TRUE?

• A)Issuing marketable securities is the primary way that they finance their activities.
• B)Bonds are the least important source of external funds to finance their activities.
• C)Stocks are a relatively unimportant source of finance for their activities.
• D)Selling bonds directly to the American household is a major source of funding for American businesses.

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Definitions:

Rate Of Inflation

The percentage increase in the general level of prices for goods and services in an economy over a period of time.

Real Return

The return on an investment after adjusting for inflation, indicating the actual purchasing power gained or lost.

American Stock Market

Refers to the financial markets in the United States where stocks, bonds, and other securities are bought and sold, including major exchanges like the NYSE and NASDAQ.

Annual Real Return

The measure of profit or loss on an investment over a one-year period, adjusted for inflation.