The comparison between direct and indirect finance. Concept Introduction: Direct Finance - In this system, the borrowers borrow directly from the financial market without intermediaries. Indirect Finance - In this system, the borrowers get the services indirectly through financial intermediaries.

Question

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Answer 1

Question

Chapter 2, Problem 1LO

To determine

The comparison between direct and indirect finance.

Concept Introduction:

Direct Finance - In this system, the borrowers borrow directly from the financial market without intermediaries.

Indirect Finance - In this system, the borrowers get the services indirectly through financial intermediaries.

Expert Solution & Answer

Explanation of Solution

Direct and indirect finances are different in the sense that in the former, there is no place for financial intermediary and in the latter; the financial intermediary plays an important role. In direct financing, the finance can be done directly through the financial market whereas in indirect financing, the money deposited or invested by households and other economic agents is used to finance the borrowing requirements through financial intermediaries. In direct financing, often, interest rate is not paid but in indirect financing interest rate has to be paid because an intermediary is involved.

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Answer 2

Question

Chapter 2, Problem 1LO

To determine

The comparison between direct and indirect finance.

Concept Introduction:

Direct Finance - In this system, the borrowers borrow directly from the financial market without intermediaries.

Indirect Finance - In this system, the borrowers get the services indirectly through financial intermediaries.

Expert Solution & Answer

Explanation of Solution

Direct and indirect finances are different in the sense that in the former, there is no place for financial intermediary and in the latter; the financial intermediary plays an important role. In direct financing, the finance can be done directly through the financial market whereas in indirect financing, the money deposited or invested by households and other economic agents is used to finance the borrowing requirements through financial intermediaries. In direct financing, often, interest rate is not paid but in indirect financing interest rate has to be paid because an intermediary is involved.

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Answer 3

Question

Chapter 2, Problem 1LO

To determine

The comparison between direct and indirect finance.

Concept Introduction:

Direct Finance - In this system, the borrowers borrow directly from the financial market without intermediaries.

Indirect Finance - In this system, the borrowers get the services indirectly through financial intermediaries.

Expert Solution & Answer

Explanation of Solution

Direct and indirect finances are different in the sense that in the former, there is no place for financial intermediary and in the latter; the financial intermediary plays an important role. In direct financing, the finance can be done directly through the financial market whereas in indirect financing, the money deposited or invested by households and other economic agents is used to finance the borrowing requirements through financial intermediaries. In direct financing, often, interest rate is not paid but in indirect financing interest rate has to be paid because an intermediary is involved.

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Answer 4

Question

Chapter 2, Problem 1LO

To determine

The comparison between direct and indirect finance.

Concept Introduction:

Direct Finance - In this system, the borrowers borrow directly from the financial market without intermediaries.

Indirect Finance - In this system, the borrowers get the services indirectly through financial intermediaries.

Expert Solution & Answer

Explanation of Solution

Direct and indirect finances are different in the sense that in the former, there is no place for financial intermediary and in the latter; the financial intermediary plays an important role. In direct financing, the finance can be done directly through the financial market whereas in indirect financing, the money deposited or invested by households and other economic agents is used to finance the borrowing requirements through financial intermediaries. In direct financing, often, interest rate is not paid but in indirect financing interest rate has to be paid because an intermediary is involved.

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Answer 5

Chapter 2, Problem 1LO

To determine

The comparison between direct and indirect finance.

Concept Introduction:

Direct Finance - In this system, the borrowers borrow directly from the financial market without intermediaries.

Indirect Finance - In this system, the borrowers get the services indirectly through financial intermediaries.

Expert Solution & Answer

Explanation of Solution

Direct and indirect finances are different in the sense that in the former, there is no place for financial intermediary and in the latter; the financial intermediary plays an important role. In direct financing, the finance can be done directly through the financial market whereas in indirect financing, the money deposited or invested by households and other economic agents is used to finance the borrowing requirements through financial intermediaries. In direct financing, often, interest rate is not paid but in indirect financing interest rate has to be paid because an intermediary is involved.

Answer 6

Chapter 2, Problem 1LO

To determine

The comparison between direct and indirect finance.

Concept Introduction:

Direct Finance - In this system, the borrowers borrow directly from the financial market without intermediaries.

Indirect Finance - In this system, the borrowers get the services indirectly through financial intermediaries.

Expert Solution & Answer

Explanation of Solution

Direct and indirect finances are different in the sense that in the former, there is no place for financial intermediary and in the latter; the financial intermediary plays an important role. In direct financing, the finance can be done directly through the financial market whereas in indirect financing, the money deposited or invested by households and other economic agents is used to finance the borrowing requirements through financial intermediaries. In direct financing, often, interest rate is not paid but in indirect financing interest rate has to be paid because an intermediary is involved.

Answer 7

Chapter 2, Problem 1LO

To determine

The comparison between direct and indirect finance.

Concept Introduction:

Direct Finance - In this system, the borrowers borrow directly from the financial market without intermediaries.

Indirect Finance - In this system, the borrowers get the services indirectly through financial intermediaries.

Answer 8

Expert Solution & Answer

Explanation of Solution

Direct and indirect finances are different in the sense that in the former, there is no place for financial intermediary and in the latter; the financial intermediary plays an important role. In direct financing, the finance can be done directly through the financial market whereas in indirect financing, the money deposited or invested by households and other economic agents is used to finance the borrowing requirements through financial intermediaries. In direct financing, often, interest rate is not paid but in indirect financing interest rate has to be paid because an intermediary is involved.