Brokers

Definition

Brokers are intermediaries who facilitate the buying and selling of financial securities, such as stocks, for clients. They earn a commission for their services and provide advice on investment decisions.

5 Must Know Facts For Your Next Test

1. Brokers play a key role in the issuance of stock by connecting corporations with potential investors.
2. They help ensure compliance with regulatory requirements during the equity financing process.
3. Discount brokers offer fewer services but charge lower fees compared to full-service brokers.
4. Online brokerage platforms have gained popularity due to their convenience and lower costs.
5. Brokers must be licensed and regulated by financial authorities like the SEC in the United States.

Review Questions

• What is the primary role of a broker in equity financing?
• How do discount brokers differ from full-service brokers?
• Why is it important for brokers to be licensed and regulated?

Related terms

Stock Exchange: A marketplace where stocks are bought and sold through brokers.

IPO (Initial Public Offering): The first time a company offers its stock to the public.

Commission: A fee paid to a broker for executing a transaction on behalf of a client.