$5.$Problem $1\mathrm{.}17($Financial Intermediation$)$ Algo

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Assume a financial transaction that involves two financial institutions, company A and company B$.$ Company A bought $$1$ billion of common stock of Company B at the IPO.

Determine the following for this transaction:

How will each institution's balance sheet be affected?

$-$Select$-$Company A'sCompany B'sItem $1$ cash will decrease and long$-$term assets will increase. $-$Select$-$Company A'sCompany B'sItem $2$ cash and equity will increase.

Will either institution receive immediate income from the transaction?

$-$Select$-$Company ACompany BNone of the companiesItem $3$ will receive immediate income derived from the transaction.

Who is the ultimate user of funds?

$-$Select$-$Company ACompany BItem $4$ is the ultimate user of funds.

Who is the ultimate source of funds?

$-$Select$-$Company ACompany BItem $5$ is the ultimate source of funds.