Question

Select all of the following that are true regarding finance: Investors demand financing, firms supply it. O The assets of a firm are used to make sales, the residual of which is a return to investors. Finance only occurs through financial intermediaries, including capital markets Increases in financing costs are pro-cyclical Finance is the way a firm pays for assets Increases in financing returns are pro-cyclical QUESTION 9 If NX<0 then s>l to pay for imports through the financial account (FA>0) CA>0 to balance BOP si since foreign investment in the domestic economy balances BOP The balance of payments is out of balance.

Answer 1

The below mentioned Points are correct
Pt 1	Incorrect	since firms demand finance and investors provide it
Pt 2	Correct	The assets of the firm are used to rending good and services and the residual of the revenue over the cost is given to the shareholder
Pt 3	Incorrect	finance can also occur from the family in bootstrapping etc not necessary to take place via the intermediate financiers
Pt 4	Correct	financing cost is pro-cyclical since the banks/investor demand a return basis the current economy conditions
Pt 5	Correct	Finance facilities the paying for an asset doesn't matter if the finance is internally generated or external finance
Pt 6	Correct	financing return are pro-cyclical since the banks/investor demand a return basis the current economy conditions

PArt 2 - the correct answer is C

when net exports are negative then domestic savings are less than domestic investment, hence the correct answer is C