Based on what you learned from reading this chapter and from studies you uncovered on the Web, which of the financial firms listed below are most likely to benefit from economies of scale or scope and which will probably not benefit significantly from these economies based on the information given?
a. A new bank offering traditional banking services (principally deposits and loans) was chartered earlier this year, gaining $50 million in assets within the first six months.
b. A community bank with about $250 million in assets provides traditional banking services but also operates a small trust department for the convenience of families and small businesses.
c. A financial holding company (FHC) with about $2 billion in assets offers a full range of banking and investment services, giving customers access to a family of mutual funds.
d. A bank holding company with just over $10 billion in assets also operates a security brokerage subsidiary, trading in stocks and bonds for its customers.
e. A financial holding company (FHC) with $750 billion in assets controls a commercial bank, investment banking house, chain of insurance agency offices, and finance company and supplies commercial and consumer trust services through its recently expanded trust department.
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One of the most adventurous of financial-service offerings in recent years has been the marketing of stock and bond mutual funds through banking companies. You will find offerings of mutual funds on many financial institutions’ Websites. For instance, visit www.wellsfargo.com ;click the link for Investing and explore the types of investments available.
