1. One characteristic of the US banking system is that a. most US non-financial firms obtain external financing through

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1 One Characteristic Of The Us Banking System Is That A Most Us Non Financial Firms Obtain External Financing Through 1 (260.31 KiB) Viewed 10 times

1. One characteristic of the US banking system is that a. most US non-financial firms obtain external financing through direct finance. b. bank loans are the primary source of external financing for US non-financial firms. c. direct finance is much more important than indirect finance as a source of external financing for US non-financial firms. d. the primary source of financing for US non-financial firms is foreign investment. e. equity markets are the primary source of external financing for US non- financial firms. 2. Provisions in debt contracts that are meant to control borrower behavior after a loan is made are known as: a. restrictive covenants. b. collateral. c. indirect finance. 3. Adverse selection occurs d. moral hazard. e. debt provisions. a. after a transaction is made. b. only in debt and equity markets. c. when a borrower can transfer costs to a third party. d. when the highest-cost customers are the most likely to seek a service. e. because the safest borrowers are most likely to need loans. 4. A record of a bank's changes in assets and liabilities from a financial transaction is known as a. an income statement. b. a T-account. c. a balance sheet. d. a financial account. e. none of the above. 5. What is the effect of a $50 cash withdrawal from a checking account? a. Assets and liabilities both decrease by $50. b. Assets and liabilities both increase by $50. c. Assets decrease by $50 with no change in liabilities. d. Liabilities decrease by $50 with no change in assets. e. Liabilities increase by $50 and decrease by $50 so the overall effect on the balance sheet is unchanged.