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Simplified balance sheets of a commercial firm and an FI are shown in Table 1–1.
Note that in the real world FIs hold a small proportion of their assets in the form of real
assets such as bank branch buildings. These simplified balance sheets reflect a reasonably accurate characterization of the operational differences between commercial firms
How can FIs purchase the direct or primary securities issued by corporations and
profitably transform them into secondary securities more attractive to household
savers? This question strikes at the very heart of what makes FIs special and important sau86198_ch01.qxd 6 Part One 4/21/02 8:52 PM Page 6 Introduction TABLE 1–1 Commercial Firm Simplified Balance
Sheets for a
and an FI Financial Intermediary Assets Liabilities Assets Liabilities Real assets
(plant, machinery) Primary securities
(debt, equity) Primary securities
(debt, equity) Secondary securities
(deposits and insurance policies) to the economy. The an...
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This document was uploaded on 03/09/2014 for the course ACC 301 at HELP University.
- Spring '09