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76 Cards in this Set
- Front
- Back
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What year was the Fed Established?
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1913
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Who is the current chairman of the FED?
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Bernanke
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How many Board of Governors are there?
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7
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How many years is the Board of Governors term in office?
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14
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Board of Governors is appointed by whom?
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President
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Board of Governors appointments are confirmed by whom?
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Senate
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How many Federal Reserve Districts are there?
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12
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How many Federal Reserve Branch offices are there?
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25
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What year was the IRS established?
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1913
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In what city is the main office complex of the FED located?
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Washington D.C.
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Name the four types of U.S. Government Securities.
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Treasury Bonds, Treasury Bills,Treasury Notes, Treasury Securitites.
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What is the Total balance of all U.S. Government Securities called?
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National Debt
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Name four attritbutes of U.S. gov't securities that make them attractive to investors.
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Reliable, always a market, Fair Return, Low Risk
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What is the four part mission of the fed?
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Minimize inflation, minimize unemployment, minimize recession, encourage stable economic growth.
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Name four regular investors in U.S. gov't securities.
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Colleges, Insurance companies, Banks, Citizens
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The fed attempts to accomplish its Mission thru Monetary Policy which is the management of what?
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Money Supply
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How does this work?
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Buying Securities puts money back in the economy but can cause inflation. Selling securities takes money out and can cause a recession. Trying to find a balance.
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Name the three tools that the fed usues.
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Open operations, Reserve Regulation, Discount Rate and Fed Funds Rate.
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Describe completely how the one of these Tools works
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Rate setting sets the depository rate at which banks can borrow from each other.
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What is Fiscal Policy? Who carries it out?
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Government taxing and spending. Schools, state, and local governments
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What does the a Federal Reserve Bank VP for Research do?
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They collect the call reports from credit unions and banks send them to Washington D.C.
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What is the "Beige Book"?
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Where all of the call reports are put. 37 compiled call reports.
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Describe a primary mortgage relationship.
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Is between a bank and a customer the bank gives money to the customer with an interest rate.
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Describe a Secondary mortgage relationship.
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Secondary mortgages is when the bank sells the customers mortgage to another finacial company who is then responsible for it.
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FHA
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1934, give loans to people that banks wouldn not give to. They currently are in the same field but do not do a very good job of it.
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Fannie Mae
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Created in 1934 and was government operated to provide mortgage to people. Currently they had to be bailed out and are not gov't controlled.
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Freddie Mac
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Created in 1934 was gov't operated handled secondary mortgage from Fannie Mae. They had to be bailed out by gov't recently and now overseen by the gov't
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Financial instruments available for sale to the general public without restriction
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Public Market
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Financial Instrument available for sale to only a few select investors
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Private Market
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Sale of assests for delivery immediately or in the very near future
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Spot Market
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Sale of assests for delivery at some designated advanced date
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Futures Market
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Financial Instruments which will mature in less than 12 months
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Money Market
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Financial instruments which will mature in more than one year
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Capital Market
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The original first sale of a financial instrument
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Primary Market
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All subsequent sales following the first sale of a financial instrument
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Secondary Market
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A real or virtual meeting place for sources of funds and usuers of funds to negotiate
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Financial Market
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Financial Statement which measures profitablility over time
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Income statment
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Schedule of inflows and outflows of cash
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Statement of cashflows
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Financial statment of what is owned and how assets are financed
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Balance Sheet
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Represent 75% of all established companies
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Proprietorship
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Generate 90% of all company sales
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Corporation
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The theory which examines the relationship between owners and managers
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Agency
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Explain Dual Taxation aspect of corporations
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Dual taxation is when a coportaion gets taxed twice. They get taxed on what they make what their stock makes in the form of dividend paid to stockholders.
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Sarbanes Oxley
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Accounting act. Accounting firms can not do the books and consulting for a business, CEO is responsible for the financial statements and more strict regulations on balance sheet and income statement
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Institutional Investors
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Banks, colleges, insurance agencies. Usually own a lot of stock
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Measure a firms ability to pay debts as they come due
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Liquidity ratios
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Measures how effectively a firm is managing its assets
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Asset managment ratios
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Measure the extent to which a firm uses debt financing
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Debt management ratios
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Measures the net results of all financing policies and operating decisions
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Profitability ratios
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Measure a firms stock price to earnings, cash flows, and book value
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Market value ratios
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What are the two types of comparisons that financial ratios can be used for?
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They can be used to compare year to year earnings or quarter to quarter earnings. Also used to compare to other competing companies
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Name four well known companies which provide financial information which can be used for comparisons
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Robert Morris, Standard & Poor, Moody, and D&B
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Small Business Admin was established in? and by?
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1953 by Eisenhower
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What was SBA mission?
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To encourage and develop small business
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What was SBA original operating activity
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Was last resort for lending to people
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What is the SBA's current primary activity? What advantage does this created?
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Current activity is to gurantee loans. They will lend to people like women & minorities up to $100,00. Creates advantage for banks because they know loans are guranteed.
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Four affected groups that SBA still makes direct loan to.
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Women, Hispanics, Aferican Americans, Non-Profit.
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Sales forecasting
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Because it lays out Sales Projections, Production Schedule, Compute Expenses, Determine Profit
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Explain why a lender might require a loan applicant to submit pro forma financial statements.
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Shows what applicants business is doing. Good indicator of how well a business is doing.
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Explain how any business could benefit from pro forma financial Statements.
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Shows how well a business is doing financially and what changes need to be made if it shows negative information.
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The use of special force and effects to produce more than normal results from given course of action.
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Leverage
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Reflects the extent to which fixed assets and associated fixed costs are utilized in the business
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Operating leverage
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Reflects the amount of debt used in the capital structure of the firm.
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Financial Leverage
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The theory which explains the yields on long-term securities as a function of short-term rates
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Expectations hypothesis
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The theory which states that Treasury securities are divided into segmentsby the various financial institutions investing in the market
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Market segmentation theory
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The theory which states that long term rates should be higher than short term rates
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Liquidity premium theory
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The term structure of interest rates
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Yield Curve
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Interest rates denoted in terms of 1/100 of 1%
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Basis points
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Assets which are sold at the end of a specified timer period. Ex: Fat cattle in an agriculture setting.
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Self-liquidating assets
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An oxymoron used to describe inadequate financing arrangements
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"Permanent" current assts
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The financing and management of the current assets of a company
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Working capital management
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The financing strategy for an asset should be tied to what factor
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Life of the assets
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Name and describe four types of Current Assets
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Cash:Money&check, Marketing securities:U.S. Gov't Securities, Accounts Recievable, Inventory Raw materials etc
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Normal upward-slopping yield curve
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Normal circumstances expansion theory
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An inverted or downward-sloping yield curve
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uncertainity ex. 911
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A humped yield curve
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Theory only
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