Question

W2 Corp. needs capital to finance a new product line. It borrows money in the form of long-term bonds underwritten by an investment bank.

Answer 1

Answer: INDIRECT TRANSFERS THROUGH INVESTMENT BANKS

Explanation: An investment bank is a financial institution who is known to assist individuals and corporations to raise their capital by underwriting. Investment banks also act as the client’s agent in the issuance of as stock and bond(securities). Indirect transfers are transfers of funds generated through stocks and bonds investment banks are key players in this type of transfers.

An underwrite issued by the investment banks serve as the middle man during issuance of securities.