The capital allocation process involves the transfer of capital among different entities that include individuals, small businesses, banks, financial intermediaries, companies, mutual funds, and other market participants. In a developed market economy, capital flows freely between entities that want to supply capital to those who want it. This flow of capital can be classified in three ways. In the table below, identify the nature of capital transfer given in the scenario with its appropriate classification: Scenario. Steve's grandfather loans him $30,000 to start a small coffee shop in the East Village in Manhattan, Elliot invests $25,000 by purchasing 1,000 shares of an emerging markets mutual fund. This mutual fund invests in companies in Brazil, India, and China. He bought the mutual fund from the mutual fund company. A small startup firm has each of the partners contribute $50,000 in capital to help the company make payroll for the next three months. Israel launched a 10-year global bond issue of $1.5 billion in early 2009. Leading investment banks such as Citigroup, Deutsche Bank, and Goldman Sachs managed the deal (So Direct Transfers O Indirect Transfers. through Investment Banks O O Indirect Transfers through Financial Intermediaries
The capital allocation process involves the transfer of capital among different entities that include individuals, small businesses, banks, financial intermediaries, companies, mutual funds, and other market participants. In a developed market economy, capital flows freely between entities that want to supply capital to those who want it. This flow of capital can be classified in three ways. In the table below, identify the nature of capital transfer given in the scenario with its appropriate classification: Scenario. Steve's grandfather loans him $30,000 to start a small coffee shop in the East Village in Manhattan, Elliot invests $25,000 by purchasing 1,000 shares of an emerging markets mutual fund. This mutual fund invests in companies in Brazil, India, and China. He bought the mutual fund from the mutual fund company. A small startup firm has each of the partners contribute $50,000 in capital to help the company make payroll for the next three months. Israel launched a 10-year global bond issue of $1.5 billion in early 2009. Leading investment banks such as Citigroup, Deutsche Bank, and Goldman Sachs managed the deal (So Direct Transfers O Indirect Transfers. through Investment Banks O O Indirect Transfers through Financial Intermediaries
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:The capital allocation process involves the transfer of capital among different entities that include individuals, small businesses, banks, financial
intermediaries, companies, mutual funds, and other market participants. In a developed market economy, capital flows freely between entities that
want to supply capital to those who want it. This flow of capital can be classified in three ways. In the table below, identify the nature of capital
transfer given in the scenario with its appropriate classification:
Scenario:
Steve's grandfather loans him $30,000 to start a small coffee shop in the East Village in
Manhattan.
Elliot invests $25,000 by purchasing 1,000 shares of an emerging markets mutual fund.
This mutual fund invests in companies in Brazil, India, and China. He bought the mutual
fund from the mutual fund company.
A small startup firm has each of the partners contribute $50,000 in capital to help the
company make payroll for the next three months.
Israel launched a 10-year global bond issue of $1.5 billion in early 2009. Leading 1
investment banks such as Citigroup, Deutsche Bank, and Goldman Sachs managed the
deal. (Source: Reuters.com, Mar. 18, 2009.)
Direct
Transfers
Indirect
Transfers
through
Investment
Banks
O
Indirect
Transfers
through Financial
Intermediaries
O
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education