Unformatted text preview: The investment banker then places these securities in the capital market and sells them to the people who want to invest. The advantage of using an intermediary is that the business firm is ensured of a full subscription of its securities by the investment banker. Hence the investment banker acts as an underwriter of the securities as well. The investment banker charges a fee for its services. E.g. Initial public offering Indirect transfers through a financial intermediary: This is the most complex form of a capital transfer. In this case, a financial intermediary issues its own securities to raise money from the savers of capital. The intermediary utilizes these funds to acquire securities/stocks of other business firms. So in this model, the provider of the capital will own the securities of the financial intermediary and the financial intermediary will own the securities of another business unit....
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This document was uploaded on 05/02/2011.
- Spring '08