The Main Reason Why Banks Are the Leading Source of External

question 12

Multiple Choice

The main reason why banks are the leading source of external finance for businesses is

• A)the interest rates on bank loans are usually lower than interest rates on corporate bonds.
• B)banks have an information-cost advantage in reducing adverse selection problems.
• C)interest paid on bank loans is deductible against the corporate income tax, whereas interest paid on corporate bonds is not.
• D)government regulators encourage small businesses to obtain funding from banks.

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Definitions:

Information Processing

A cognitive approach that likens the mind to a computer in terms of how information is encoded, stored, and retrieved.

Memory

The faculty by which the mind stores and remembers information, including events, facts, and experiences.

Illusion Of Motion

A visual perception in which a stationary object appears to be moving due to specific visual cues or arrangements.

Sensory Memory

The shortest-term element of memory, the immediate, very brief recording of sensory information in the memory system.