Which of the following statements concerning external sources of financing for nonfinancial businesses in the United States are true?
A) Stocks are a far more important source of finance than are bonds.
B) Stocks and bonds, combined, supply less than one-half of the external funds.
C) Financial intermediaries are the least important source of external funds for businesses.
D) Since 1970, more than half of the new issues of stock have been sold to American households.

Question

Quizplus · Accepted Answer

According to the textbook, "Principles of Economics" by N. Gregory Mankiw, the statement that "stocks and bonds, combined, supply less than one-half of the external funds" is true. Option A is false: bonds are a more important source of finance than stocks. Option C is also false: financial intermediaries, such as banks and mutual funds, are a very important source of external funds for businesses. Option D is false: since 1970, more than half of the new issues of stock have been sold to financial institutions, not American households.

Which of the Following Statements Concerning External Sources of Financing