Which of the Following Statements Concerning External Sources of Financing

question 99

Multiple Choice

Which of the following statements concerning external sources of financing for nonfinancial businesses in Canada is true?

• A) Stocks are a far more important source of finance than are bonds.
• B) Stocks and bonds, combined, supply less than one-half of the external funds.
• C) Financial intermediaries are the least important source of external funds for businesses.
• D) Since 1970, more than half of the new issues of stock have been sold to Canadian households.

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Definitions:

Debt And Equity

The two primary ways a company finances its operations, through borrowing money (debt) and selling shares (equity).

Use Of Funds

The detailed explanation of how a business or individual plans to allocate capital or revenue toward specific expenditures.

Cost Of Capital

The rate of return that a company must earn on its projects to maintain its market value and attract funds, encompassing the cost of both debt and equity financing.

Equity Financing

Funding a company by selling ownership shares in the company, thereby diluting ownership but not incurring debt.