When a Large Company Issues a Financial Instrument into the Financial

question 45

Multiple Choice

When a large company issues a financial instrument into the financial markets:

• A) funds flow indirectly from saver to borrower.
• B) the cost of funds is generally higher owing to the risk involved.
• C) it buys a financial claim.
• D) it sells a financial claim.

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Definitions:

Business Firm

An organization engaged in commercial, industrial, or professional activities, aiming to earn profits by providing goods or services.

Usury Law

Legislation that sets maximum interest rates that can be charged on loans, to prevent excessive interest rates or usury.

Efficiency Of Investment

The degree to which invested resources are used optimally to achieve desired outcomes without waste.

Beneficiary

An individual or entity entitled to receive benefits or profits from a will, trust, insurance policy, or other arrangements designed to distribute assets.