With Regard to External Sources of Financing for Nonfinancial Businesses

question 22

Multiple Choice

With regard to external sources of financing for nonfinancial businesses in the United States,which of the following are accurate statements?

• A) Direct finance is used in less than 5% of the external financing of American businesses.
• B) Only large, well-established corporations have access to securities markets to finance their activities.
• C) Loans from banks and other financial intermediaries in the United States provide five times more financing of corporate activities than do stock markets.
• D) All of the above.
• E) Only A and B of the above.

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Definitions:

Consumer Surplus

The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually pay.

Willing to Pay

The maximum price at which a consumer values a good or service enough to purchase it.

Producer Surplus

The difference between the amount producers are willing to receive for a good or service and the amount they actually receive, due to higher market prices.