Determine whether each of the following is direct financing or indirect financing.(8 points)

Question

Direct Financing Indirect Financing
selling stock on the stock market

taking out a loan at a commercial bank

investing in a friend's new business

investing in a mutual fund

Answer 1

Here’s the classification of each financing method as either direct financing or indirect financing:

Direct Financing:

1. Selling stock on the stock market
2. Investing in a friend's new business

Indirect Financing:

1. Taking out a loan at a commercial bank
2. Investing in a mutual fund

Summary:

• Direct Financing: Selling stock on the stock market, Investing in a friend's new business
• Indirect Financing: Taking out a loan at a commercial bank, Investing in a mutual fund