Chapter 8 An Economic Analysis of Financial Structure

American businesses get their external funds primarily from

• bank loans.

• bonds and commercial paper issues.

• stock issues.

• loans from nonbank financial intermediaries.

Of the sources of external funds for nonfinancial businesses in the United States, loans from banks and other financial intermediaries account for approximately ________ of the total.

• 6%

• 40%

• 56%

• 60%

Of the sources of external funds for nonfinancial businesses in the United States, corporate bonds and commercial paper account for approximately ________ of the total.

• 5%

• 10%

• 32%

• 50%

Of the following sources of external finance for American nonfinancial businesses, the least important is

• loans from banks.

• stocks.

• bonds and commercial paper.

• loans from other financial intermediaries.

Of the sources of external funds for nonfinancial businesses in the United States, stocks account for approximately ________ of the total.

• 2%

• 11%

• 20%

• 40%

Which of the following statements concerning external sources of financing for nonfinancial businesses in the United States are true?

• Stocks are a far more important source of finance than are bonds.

• Stocks and bonds, combined, supply less than one half of the external funds.

• Financial intermediaries are the least important source of external funds for businesses.

• Since 1970, more than half of the new issues of stock have been sold to American households.

Which of the following statements concerning external sources of financing for nonfinancial businesses in the United States are true?

• Issuing marketable securities is the primary way that they finance their activities.

• Bonds are the least important source of external funds to finance their activities.

• Stocks are a relatively unimportant source of finance for their activities.

• Selling bonds directly to the American household is a major source of funding for American businesses.

With regard to external sources of financing for nonfinancial businesses in the United States, which of the following are accurate statements?

• Marketable securities account for a larger share of external business financing in the United States than in Germany and Japan.

• Since 1970, most of the newly issued corporate bonds and commercial paper have been sold directly to American households.

• Direct finance accounts for more than 50 percent of the external financing of American businesses.

• Smaller businesses almost always raise funds by issuing marketable securities.

Nonfinancial businesses in Germany, Japan, and Canada raise most of their funds

• by issuing stock.

• by issuing bonds.

• from nonbank loans.

• from bank loans.

As a source of funds for nonfinancial businesses, stocks are relatively more important in

• the United States.

• Germany.

• Japan.

• Canada.