Question
The text explains that'financial intermediaries' act asgo-betweens for borrowers andlenders, borrowing funds from savers and lending them to borrowers such as firms. The most familiar
The text explains that'financial intermediaries' act asgo-betweens for borrowers andlenders, borrowing funds from savers and lending them to borrowers such as firms. The most familiar financial intermediary is a bank. Individual consumers who earn more than they spend put some funds in a savings account and in return receive interest. The savings become available by the bank to loan to firms. Other less familiar examples given in the text are mutualfunds, pension funds and insurance companies. For each ofthese, who are the lenders(or savers), what do they receive inreturn, and how do the funds reachfirms?
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