Assume a financial transaction that involves two financial institutions, company A and company B. Company A invested $3 million in the bond issued by Company B and maturing in 5 years.

Determine the following for this transaction:

1. How will each institution's balance sheet be affected?

   (Company A's or Company B's) cash and long-term debt will increase. (Company A's or Company B's) cash will decrease and long-term assets will increase.

2. Will either institution receive immediate income from the transaction?

   (Company A or Company B or None of the companies) will receive immediate income derived from the transaction.

3. Who is the ultimate user of funds?

   (Company A or Company B) is the ultimate user of funds.

4. Who is the ultimate source of funds?

   (Company A or Company B) is the ultimate source of funds.