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The process of creating a secondary market for securities or contracts is termed brokerage. True or...

The process of creating a secondary market for securities or contracts is termed brokerage.

True or False

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Answer #1

Solution :

The statement given is false. The term brokerage can be understood as follows :

Brokerage :

It is the amount of commission charged by a broker from a principal for undertaking transactions of buying and selling of securities on his (principal's ) behalf.

It is a commission / fee charged by an intermediary, namely broker, who acts as an agent, for carrying out buying or selling of securities on behalf of a principal.

The term "brokerage " is sometimes also used for an organization that undertakes activities of buying or selling of securities on behalf of a given principal.

Thus the process of creating a secondary market for securities or contracts cannot be termed as brokerage.

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