If your firm obtains most of its financing from commercial banks, then it primarily accesses the capital markets through:
A) direct financing.
B) indirect financing.
C) a legal loophole that allows all commercial banks the ability to underwrite securities.
D) none of the above.

Question

Quizplus · Accepted Answer

If a firm obtains most of its financing from commercial banks, it primarily accesses the capital markets through indirect financing. Indirect financing refers to the process whereby businesses obtain funding from financial intermediaries, who in turn raise the necessary funds from savers in the capital markets. Commercial banks act as intermediaries between savers and borrowers, and their lending activities involve the indirect issuance of securities such as loans, bonds, and commercial paper. Therefore, option B is the correct answer. Options A, C, and D are not applicable.

If Your Firm Obtains Most of Its Financing from Commercial