When a finance company uses its accumulated retained profits as the source of funding for its...
When a finance company uses its accumulated retained profits as the source of funding for its lending, it does NOT act as a financial intermediary for these transactions.
True
False
Homework Answers
True
Financial intermediary is a middleman between borrower and lender. A financial intermediary is required when source of funding is external and third party involved i.e lender. On the other hand, accumulated retained profits is an internal source of funding. Retained earning is the portion of profit not distributed as dividend to shareholders and kept for future investment and growth.
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