When Financial Intermediaries Deleverage,firms Cannot Fund Investment Opportunities Resulting in

question 30

Multiple Choice

When financial intermediaries deleverage,firms cannot fund investment opportunities resulting in

• A)a contraction of economic activity.
• B)an economic boom.
• C)an increased opportunity for growth.
• D)a call for government regulation.

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Definitions:

Bond Discount

The contrast in value between what a bond is worth in terms of its face value and the lesser amount it is sold for in the market.

Interest Method

A method used in finance to calculate the interest portion of a payment or the return on an investment over a period of time.

Semiannual Interest

Interest that is both computed and disbursed semi-annually on an investment or loan.

Bond Discount

The financial disparity that occurs when a bond is sold for an amount below its stated face value, comparing its selling price to its face value.