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.
An individual deposits funds into a savings account at his credit union.
An individual deposits funds into a savings account at his credit union.
A company sells its stocks to investors.
A company sells its stocks to investors.
An individual applies for a mortgage through a mortgage bank.
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The correct example of direct finance is:
A company sells its stocks to investors.
Direct finance occurs when borrowers borrow funds directly from lenders in financial markets, such as through the issuance of stocks or bonds. In this case, the company is directly raising funds from investors by selling its stocks.
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