With direct finance, funds are channeled through the financial market from the savers, spenders borrowers, savers O spenders, investors O investors, savers directly to the

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
icon
Related questions
Question

Don't answer by pen paper and don't use AI bot 

**Title: Understanding Direct Finance in Financial Markets**

**Text for Educational Website:**

To grasp how funds flow in financial markets through direct finance, consider the following question:

---

**Question:**

With direct finance, funds are channeled through the financial market from the _______ directly to the _______.

**Answer Choices:**

1. ☐ savers, spenders
2. ☐ borrowers, savers
3. ☐ spenders, investors
4. ☐ investors, savers

---

**Explanation:**

In direct finance, financial markets facilitate the transfer of funds directly from those who have surplus funds (savers or investors) to those who need funds (spenders or borrowers). This process bypasses intermediaries such as banks, allowing for the efficient allocation of capital where it is most needed.

Understanding this flow is crucial for students studying economics or finance, as it highlights the essential role of financial markets in the economy.

**Note on Answer Choices:**

- "Savers, spenders" implies that those who save their money are providing funds to those who spend or invest it.
- "Borrowers, savers" is incorrect as it reverses the flow of funds.
- "Spenders, investors" is incorrect as investors typically provide funds.
- "Investors, savers" is incorrect as it misplaces the roles of providers and recipients of funds.
Transcribed Image Text:**Title: Understanding Direct Finance in Financial Markets** **Text for Educational Website:** To grasp how funds flow in financial markets through direct finance, consider the following question: --- **Question:** With direct finance, funds are channeled through the financial market from the _______ directly to the _______. **Answer Choices:** 1. ☐ savers, spenders 2. ☐ borrowers, savers 3. ☐ spenders, investors 4. ☐ investors, savers --- **Explanation:** In direct finance, financial markets facilitate the transfer of funds directly from those who have surplus funds (savers or investors) to those who need funds (spenders or borrowers). This process bypasses intermediaries such as banks, allowing for the efficient allocation of capital where it is most needed. Understanding this flow is crucial for students studying economics or finance, as it highlights the essential role of financial markets in the economy. **Note on Answer Choices:** - "Savers, spenders" implies that those who save their money are providing funds to those who spend or invest it. - "Borrowers, savers" is incorrect as it reverses the flow of funds. - "Spenders, investors" is incorrect as investors typically provide funds. - "Investors, savers" is incorrect as it misplaces the roles of providers and recipients of funds.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Investment Companies
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
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
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…
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