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Banking & Fin - Ch 2

Banking & Finance - Financial Institution

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