Homework Sourse2 what are two major differences between brokers such as sec
2- what are two major differences between brokers (such as security brokers) and depository institutions (such as commercial banks)?
2- what are two major differences between brokers (such as security brokers) and depository institutions (such as commercial banks)?
Solution
The major types of depository Institutions are commercial banks and credit unions. They Accept deposits from individuals and businesses and use them from lending to borrowers.
Brokers act as a middleman between the buyers and sellers and earn commission in the process.
The first difference between a broker and depository institutions that the depository Institutions accept deposits from the general public while a broker takes no such deposit for further lending.
The Other difference lies in the scale of operations. While brokers deal on a small scale depository Institutions are usually large Institutions which are professionally managed and deal with huge amount of funds.
