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Banking & Fin - Ch 3

Banking & Finance - Income from Loans and Securities

QuestionAnswer
Something owned by an indiviudal or other entity Asset
The fee charged for borrowing money Member Banks
Competition, Market Rates, Borrower's creditworthiness Factors in determining the amount of interest to charge
Largest Asset - Produces largest amount of income for banks Interest on loans
Banks invest money into securities (stocks and bonds)as a form of income Interest on Securities
The ability to quickly turn an asset into cash Liquidity
The date on which the investor can receive the intial investment Maturity
The securities that the banks hold provide an income by the interest earned Gains on Securitites
When the bank sells a security for more than it's purchase price Gain
A source of income for banks where customers are charged for certain services Income From Fees
When a customer doesn't have enought money in their checking account to cover transactions Insufficient Funds Fee
Provides funds to cover a check written if there isn't enought money in the account, a fee is then charged Overdraft Program
Negative Balance Overdraft
Requires Cardholders to declare that they want over the limit transactions covered for a fee Credit Card Act of 2009
The fee for withdrawing cash from an ATM Surcharge
The fee for checking your account balance at ATM Account inquiry Fee
The fee for having an individually secured container, usually within a bank vault Safe Deposit Box
The fee for purchasing an exact amount payable to a specific party Money Orders
The fee for if a customer does not make a transaction within a specified time Inactivity Fee
The chance that something unfavorable could happen to a person or property Risk
Provides protection from certain risks that can cause a financial loss Insurance
A named person who will receive the financial protection form the insurance policy Beneficiary
Life insurance that will pay off a loan if the insured dies Credit Life Insurance
Pays off the loan balance on your home on your death Mortgage life insurance
Covers property we own - houses and cars Property and Casualty Insurance
Covers the financial losses that may occur if found responsbile for property loss or injuries to others Liability Insurance
Pays some or all the medical costs associated with an illness or accident Health Insurance
Provides monthly payments to replace income lost when a worker is unable to due to illness, injurt or disease Disability Insurance
The person or institution that controls the financial assets for the customer trustee
A legal document drawn up to define how the customer's assets should be handled Trust
Preparing for the transfer of assets after a clients death Estate Planning
Objective of Estate Planning Minimize taxes
The laws that pertain to wills and distribution of assets after a person's death probate laws
refers to the services offered to business customers to help with the management of their cash Treasury and Cash Management Services
Provide retirement income for employees of a business Pension
Provides the service of securities trading to customers Brokerage Services
Buying and selling securities for a customer is called trading
A service for clients with large sums of money to invest and don't have the time or knowledge to handle their own investments Asset Management
When an investment bank buys a new stock directly from the company wanting to generate cash Underwriting
When the bank makes money off of the difference between the price paid by the investment bank and the price sold to the public Underwriting Spread
Two companies agree to combine Merger
One company buys another company, setting itself up as the new owner Acquisition
When the bank pays interest to customers for using their money Interest Expense
The costs that are incurred to keep the bank in business: Utilities, Rent, Employee Wages and Benefits, Training, Technology, Office Equipment, Security Expenses, Advertising & marketing Operating Expenses
Occurs when a bank's income exceeds its expenses (Total income - Total Expenses = ??) Profit
Created by: mryan396
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