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What are the three primary ways in which capital is transferred between savers and borrowers? Describe...

What are the three primary ways in which capital is transferred between savers and borrowers? Describe each one.

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Answer #1

-Direct Transfers: through money & securities, which occur when business sells stocks/bonds directly to savers without any financial institution.

-Indirect Transfers-INVESTMENT BANK: Also known as primary market transaction, which occur through an INVESTMENT BANK underwriting the issue.

-Indirect Transfers-FINANCIAL INTERMEDIARY: Which occur through FINANCIAL INTERMEDIARY - bank, insurance company, or mutual fund. Intermediary obtains funds from the savers in exchange for securities. Then intermediary uses this money for buying and holding businesses' securities, while savers hold intermediary's securities.

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