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Banking & Fin - Ch 2
Banking & Finance - Financial Institution
| Question | Answer |
|---|---|
| Businesses that offer financial services (Banks, Credit Unions, Savings Associations) | Financial Institutions |
| Money Placed in an account | Deposit |
| Customers who make Deposits | Depositors |
| Owned by investors, called stockholders Approx. 6,500 in the US | Commercial banks |
| One that allows the owner to use it to pay a third party | Transaction Account |
| Deposit Accounts that provide a safe place to store your money, no check writing, receive interest from bank | Savings Account |
| Pays more interest, requires larger initial deposits, a minimum balance, and limited transactions | Money market |
| Originally organized to help people save money, (small deposits were once not accepted, they accepted them), Sometimes called Thrift Institutions, operate for a profit, owned by stockholders | Savings and Loan Associations |
| Provide many of the same services, owned by members, non-profit, close to 8,000 in the US | Credit Unions |
| A business or organization that is owned by its members | Cooperative |
| Savings account at a credit union | Share account |
| Checking accounts at a credit union | Share Draft Account |
| Limited number of deposit accounts, may only offer car loands, no securities or insurance, servce smaller geographic area | Credit Union Limitations |
| Covers the deposits of customers if an institution fails | Deposit Insurance |
| Depository intitutions share their risks and pool money by paying premiums into the _____ | Deposit Insurance Fund (DIF) |
| Independent Federal Agency established in 1933, Created to promote public confidence in the banks, during financial crisis of 2008 coverage was raised to $250,000 | More of FDIC |
| Deposits are insured up to 4250,00 per ownership category per depository institution | FDIC Limits |
| Account Ownership Categories | Single Joint Retirement Accounts Trust Accounts Employee Benefit Plans Government Accounts |
| Established in 1970 to insured credit union deposits, administered by the National Credit Uninion Administration (NCUA) | National Credit Union Share Insurance Fund (NCUSIF) |
| Do no accept deposits, accept money from customers to invest in business deals (Investment Banks, Securities, Firms, Finance Companies, Insurance Companies) | Non-Depository Institutions |
| Provide Services for Buinsesses | Investment Bank |
| Financial Instrument that pays interest or gives the investor part ownership of the company | Securities |
| Debt issued by a governement or company | Bonds |
| A security that gives the purchaser part ownership in the company | Stock |
| Payments of profits to stockholders | Dividend |
| Financial Institutions involved in the trading of securities in financial markets (Also called brokerage firms, stockbrokers, or bond brokers) | Securities Firms |
| Advice customers on which securities to buy, assist clients in managing their investments, online services | Full Service Brokerage Firms |
| Place orders for customers, commissions are less and possibly fees, Servcies are limited, most operate only through website | Discount Brokers |
| Make profits by issuing loans to both individuals and businesses | Finance Companies |
| Provide personal loans to individuals, loan money to individuals with poor credit | Consumer Finance Companies |
| Short-term loans designed to cover expenses until the borrowers next payday | Pay-day Lenders |
| Provide loans for businesses, such as retail stores, arrangements are made to provide loans on site to customers | Business Finance Companies |
| Formed by manufacturer to provide loans so the manufacturer can easily sell its goods | Captive Finance Company |
| Profit businesses that primarily sell insurance | Insurance Companies |
| Selling insurance policies, Selling investment products | Two ways insurance companies generate revenue |
| Consumers buy an insurance policy by making periodic payments | Premiums |
| Insurance Contract | Policy |
| Person or thing being covered | Insured |
Created by:
mryan396
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