Which of the following can be described as direct finance?
A) You take out a mortgage from your local bank.
B) You borrow $2500 from a friend.
C) You buy shares of common stock in the secondary market.
D) You buy shares in a mutual fund.
B
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During the period 2001-2004, the U.S. Federal Reserve lowered nominal interest rates on the dollar by more than the European Central Bank (ECB) did on the euro, a move that most market participants viewed as temporary. What was the effect on the dollar-euro exchange rate?
a. The dollar depreciated against the euro. b. The dollar appreciated against the euro. c. There was no change in the dollar-euro rate because expectations adjusted. d. There was no change in the dollar-euro rate because real interest rates were unchanged.
Given the diagram below, which level of output should the entrepreneur choose?
A. Either X1 or X3 since the profit level will be the same
B. X3 since any increase in output will reduce profits
C. X1 since any decrease in output will reduce profits
D. X2 since at this level the difference between MR and MC is maximized