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Which of the following is an example of direct finance?(1 point)
A company sells its stocks to investors.
An individual deposits funds into a savings account at his credit union.
A small business opens a line of credit from a commercial bank.
An individual applies for a mortgage through a mortgage bank.
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A company sells its stocks to investors.
Explanation: Direct finance occurs when borrowers issue securities directly to lenders (investors). Selling stock is a direct transfer of funds from investors to the company. Deposits, bank lines of credit, and mortgages involve financial intermediaries (indirect finance).
Explanation: Direct finance occurs when borrowers issue securities directly to lenders (investors). Selling stock is a direct transfer of funds from investors to the company. Deposits, bank lines of credit, and mortgages involve financial intermediaries (indirect finance).
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