Final answer:
Mutual funds do provide detailed financial reports to shareholders, a true statement. Company shareholders usually elect the board of directors, who then manage or supervise the hiring of company managers. Banks act as intermediaries by channeling funds from savers to borrowers.
Step-by-step explanation:
To answer the student's question directly, mutual funds (MFs) do send detailed financial reports to shareholders. This is true. These reports typically include information about the fund's holdings, performance, management, and other relevant financial data which helps shareholders make informed decisions.
Choosing Company Managers
Shareholders who own a company typically choose the company managers during an annual general meeting (AGM) where they vote to elect the board of directors.
The board of directors, which represents the interests of the shareholders, is responsible for the high-level governance of the company and makes decisions on hiring and overseeing the company's management.
Financial Intermediaries
Banks are called financial intermediaries because they facilitate transactions between savers and borrowers. They collect funds from depositors and lend them to individuals or businesses in need of capital.
Financial Capital Choices
For a small firm needing a surge of financial capital, the choice between borrowing and issuing stock depends on factors such as the desire to maintain control over the company, the cost of borrowing, and the firm's financial condition.
Issuing stock can bring in new shareholders and dilute existing ownership, but it doesn't require repayment like a loan does whereas borrowing keeps ownership intact but requires consistent repayment with interest.