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Determine whether each of the following is direct financing or indirect financing.
1) selling stock on the stock market A) direct funding B) Indirect funding
2) selling bonds on the capital market A) direct funding B) indirect funding
3) taking out a loan at a commercial bank A) direct funding B) Indirect funding
4) investing in a mutual fund A) direct funding B) indirect funding

Respuesta :

Answer:

1. A

2. A

3. B

4. B

Explanation:

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chilljain33

Direct financing refers to a condition where no intermediaries are involved in the financial matters ; whereas, indirect financing includes the role of intermediaries.

What is direct and indirect financing?

  1. Selling a stock on the stock market platforms like NASDAQ does not involve any intermediary, and hence it is an example of direct funding.
  2. To sell bonds on the capital markets, again there is no such involvement of intermediaries, which makes it an example of direct funding.
  3. To take a loan at a commercial bank involved middlemen like bank agents, and hence it is an example of indirect funding.
  4. The mutual fund managers pool money and invest in different classes, and thus investing in a mutual fund is an example of indirect funding.

Hence, it can be stated that selling stocks or buying bonds are examples of direct funding; whereas, taking commercial bank loans or mutual fund investments are types of indirect financing.

Learn more about direct and indirect financing here:

https://brainly.com/question/5704077

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