Notice how financial intermediaries or institutions

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Unformatted text preview: tice how financial intermediaries or institutions are standing, or intermediating, between the household and corporate sectors. These intermediaries fulfill two functions; any given FI might specialize in one or the other or might do both simultaneously. The first function is the brokerage function. When acting as a pure broker, an FI acts as an agent for the saver by providing information and transaction services. For example, full-service securities firms (e.g., Merrill Lynch) carry out investment research and make investment recommendations for their retail (or household) clients as well as conducting the purchase or sale of securities for commission fees. Discount brokers (e.g., Charles Schwab) carry out the purchase or sale of securities at better prices and with greater efficiency than household savers could achieve by trading on their own. This efficiency results in reduced costs of trading or economies of scale (see Chapter 21 for a detailed discussion). Independent insurance brokers identify the best types of insurance policies household savers can buy to fit their savingsā€”retirement plans....
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This document was uploaded on 03/09/2014 for the course ACC 301 at HELP University.

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