Question

1. Explain how securities firms differ from investment banks. In what ways are

they financial intermediaries?

Answer 1

Investment bank is a financial institution that facilitates, individuals, corporations and governments in raising capital by underwriting the securities and sometimes act as agent in issuance of securities.
Whereas securities firm facilitates buy and sell transactions between individual investors unlike investment banks, these firms doesn't issue securities but trade them in open market.

Both the investment banks and securities firm act as financial intermediaries, because they both move funds to client parties from buyers of securities, and this function creates efficient markets and lowers the cost of conducting business.