Skyline Chili wants to finance the purchase of new equipment for its restaurants.The firm has limited internal funds,so Skyline likely will
A)demand funds from the financial system by buying bonds.
B)demand funds from the financial system by selling bonds.
C)supply funds to the financial system by buying bonds.
D)supply funds to the financial system by selling bonds.

Question

Quizplus · Accepted Answer

Skyline Chili needs to obtain external funds to finance its equipment purchase. The most common way to do so is by issuing bonds and selling them in the financial system, which is known as bond financing. Therefore, choice B is the best option. Choices A, C, and D all involve Skyline either buying or selling bonds that are not related to its financing needs.

Skyline Chili Wants to Finance the Purchase of New Equipment