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An entity whose earnings exceeds its expenditure can lend or invest the surplus revenue to assist that extra income produce more revenue sooner or later. Though alternatively, an entity whose earnings is less than its expenditure can increase capital by borrowing or selling equity claims, decreasing its bills, or increasing its revenue. The lender can discover a borrowerâ€”a financial middleman such as a financial institution â€”or purchase notes or bonds (company bonds, authorities bonds, or mutual bonds) within the bond market The lender receives interest, the borrower pays a higher curiosity than the lender receives, and the financial intermediary earns the difference for arranging the mortgage.
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