Simplified balance sheets of a commercial firm and an

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ssets. 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 and FIs. 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 Commercial Firm 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...
View Full Document

This document was uploaded on 03/09/2014 for the course ACC 301 at HELP University.

Ask a homework question - tutors are online