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RE Finance 1-4
Unit 2
Term | Definition |
---|---|
Annual Percentage Rate (APR) | the total loan cost through a standard measurement of interest rates. See example on page 29. |
commercial paper | commercial banks loans for personal property & short term business needs. |
discount rate | the fed charges the borrowing bank interest or the cost of borrowed funds to the borrower bank. |
federal funds rate | the rate of intrest charged to borrowing banks for short loan periods. |
M1,M2,M3 | M1 is more easily obtainable (cash, checking accounts, etc) M2 assest that are less liquid (M1 & retirement accounts, etc.) M3 even less liquid (M2 plus deposits over 100,000, money in banks abroad, etc.) |
open-market operations | The Feds use these tools to balance the economy. They purchase or sale government securities. |
prime rate | the rate a commercial bank charges its most creditworthy customers or its prime customers. |
quantitative easing (QE) | the Federal Open Market Committe bought mortgage backed securities & long term treasury notes from the banks. |
Regulation Z | a law that requires lenders to reveal total loan cost |
reserve requirements | member banks are required to keep reserves in the bank to make availble for bank depositors. |
securities | from time to time, short or long term debt instruments may be issued and sold bt ht Treasury to generate the cash it requires. |
Treasury bonds | The Treasury's long term debt instuments, mature in 30 years |
Treasury bills | The Treasury's short term securities |
Treasury notes | the Treasury's intermediate length obligation for 2-10 years |
Troubled Asset Relief Program (TARP) | the Treasury was authorized to spend 700 billion to purchase assets from financial institutions in trouble. It cost taxpayers $300 billion. |
Truth in Lending Act (TILA) | Allows consumers to compare cost of credit, must disclose annual percentage rate, regulation Z requires all disclosure of terms. |
Community Reinvestment Act | Ensures that financial institutions pursue their responsibilities to meet both deposit in credit needs of members of their communities |
Home mortgage disclosure Act | Obligation to report income level Rachel characteristics and ginger of mortgage applicants |
Tax increment financing | Takes money from taxes to improve the area |