Which of the following is an example of direct finance?(1 point)
Responses
A small business opens a line of credit from a commercial bank.
A small business opens a line of credit from a commercial bank.
A company sells its stocks to investors.
A company sells its stocks to investors.
An individual deposits funds into a savings account at his credit union.
An individual deposits funds into a savings account at his credit union.
An individual applies for a mortgage through a mortgage bank.
A company sells its stocks to investors.
The example of direct finance among the options given is:
- A company sells its stocks to investors.
The correct example of direct finance from the given options is "A company sells its stocks to investors."
Direct finance refers to the process of obtaining funds directly from financial markets. In this case, a company sells its stocks to investors, which means that the company is raising capital by issuing and selling shares of its stock to individuals or institutions. The investors who purchase these stocks become partial owners of the company and provide the company with the required funds.
To select the correct answer in such multiple-choice questions, you need to understand the concept of direct finance and identify the option that aligns with that concept. In this case, it is important to recognize that selling stocks to investors directly in the financial market is an example of direct finance.