Which of the Following Is Not One of the Eight

question 22

Multiple Choice

Which of the following is not one of the eight basic puzzles about financial structure?

• A) Debt contracts are typically extremely complicated legal documents that place substantial restrictions on the behavior of the borrower.
• B) Indirect finance, which involves the activities of financial intermediaries, is many times more important than direct finance, in which businesses raise funds directly from lenders in financial markets.
• C) Collateral is a prevalent feature of debt contracts for both households and business.
• D) There is very little regulation of the financial system.

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Definitions:

CRA

Credit Risk Analysis, assessing the risk of default on a loan by evaluating the potential borrower's creditworthiness, or it could stand for Canada Revenue Agency, the federal agency responsible for tax laws for the Canadian government.

Operating Lease

A lease agreement allowing the use of an asset without ownership, typically with shorter terms than capital leases.

Lessor

An entity that leases property or equipment to a lessee in exchange for rental payments.

Conditional Sales Agreement

An agreement where the sale is contingent on meeting specific conditions, such as the buyer making all payments as agreed.