正确答案：(c) Small businesses face a number of well-documented problems when seeking to raise additional finance. These problems havebeen extensively discussed and governments regularly make initiatives seeking to address these problems.Risk and securityInvestors are less willing to offer finance to small companies as they are seen as inherently more risky than large companies.Small companies obtaining debt finance usually use overdrafts or loans from banks, which require security to reduce the levelof risk associated with the debt finance. Since small companies are likely to possess little by way of assets to offer as security,banks usually require a personal guarantee instead, and this limits the amount of finance available.Marketability of ordinary sharesThe equity issued by small companies is difficult to buy and sell, and sales are usually on a matched bargain basis, whichmeans that a shareholder wishing to sell has to wait until an investor wishes to buy. There is no financial intermediary willingto buy the shares and hold them until a buyer comes along, so selling shares in a small company can potentially take a longtime. This lack of marketability reduces the price that a buyer is willing to pay for the shares. Investors in small companyshares have traditionally looked to a flotation, for example on the UK Alternative Investment Market, as a way of realising theirinvestment, but this has become increasingly expensive. Small companies are likely to be very limited in their ability to offernew equity to anyone other than family and friends.Tax considerationsIndividuals with cash to invest may be encouraged by the tax system to invest in large institutional investors rather than smallcompanies, for example by tax incentives offered on contributions to pension funds. These institutional investors themselvesusually invest in larger companies, such as stock-exchange listed companies, in order to maintain what they see as anacceptable risk profile, and in order to ensure a steady stream of income to meet ongoing liabilities. This tax effect reducesthe potential flow of funds to small companies.CostSince small companies are seen as riskier than large companies, the cost of the finance they are offered is proportionatelyhigher. Overdrafts and bank loans will be offered to them on less favourable terms and at more demanding interest rates thandebt offered to larger companies. Equity investors will expect higher returns, if not in the form. of dividends then in the formof capital appreciation over the life of their investment.