Question

Do banks usually have many variable costs? A specific type of business that tends to have relatively high fixed costs is the retail stock brokerage business. There are many brokerage firms in the U.S. including Charles Schwab and E*Trade. The retail stock brokerage business also tends to have relatively low variable costs. When there’s a lot of trading going on by investors in various securities, brokerage firms can do quite well. However, when trading slows down, that can be a very difficult time for brokerage firms.

(BUS350)