An Innovation That Blurred the Distinction Between Brokerage Firms and Commercial

question 73

Multiple Choice

An innovation that blurred the distinction between brokerage firms and commercial banks was Merrill Lynch's development in 1977 of the

• A)cash management account.
• B)money market mutual fund.
• C)individual retirement account.
• D)discount brokerage.

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Definitions:

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not influence future business decisions.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision, representing the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Incremental Revenues

Additional revenue generated from a specific action or decision, comparing the difference in total revenue with and without the action.

Incremental Revenues

Additional income generated from a particular business decision or activity, beyond the existing baseline revenue.