Question

For question 1A, in the table below please correctly identify the nature of the capital transfer given in the scenario with its appropriate classification.

1. Capital allocation process Aa Aa 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 clssified in three ways. In the table below, identify the nature of capital transfer given in the scenario with its appropriate classification:

Answer 1

Citibank issues loan to Jennifer for the expansion of her flower delivery business – Indirect transfer through Financial Intermediaries

Since, the bank is involved in issuing of loan

Based in Grass Valley, shares issued directly without involving bank or financial institution – Direct Transfer

Since, no party involved

Israel launched a 10-year global bond issue, investment bank managed – Indirect Transfer through investment banks

Erin borrows money from her uncle to buy a new laptop – Direct transfer

Since no other party or intermediary involved.