The savings-investment process
A) involves the transfer of business funds to individuals for investing in stocks and bonds
B)involves the transfer of business funds to individuals for investing in homes
C) involves the transfer in individual savings to the Federal Government.
D) involves the transfer in individual savings to business firms in exchange for their securities.

Question

The savings-investment process
A) involves the transfer of business funds to individuals for investing in stocks and bonds 
B)involves the transfer of business funds to individuals for investing in homes
C) involves the transfer in individual savings to the Federal Government.
D) involves the transfer in individual savings to business firms in exchange for their securities.

Quizplus · Accepted Answer

The savings-investment process refers to the flow of funds from individual savers to business firms, which use those funds to finance investments in capital goods, such as equipment or buildings. In exchange for those investments, the firms issue securities, such as stocks or bonds, which are purchased by individual investors, either directly or through financial intermediaries. Therefore, option D is the correct choice as it describes the flow of funds from individual savings to business firms in exchange for their securities.

The Savings-Investment Process