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37 Cards in this Set

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Insurance Companies
Provide financial protection to individuals and businesses for life, property, liability, and health uncertainties.
Pension Funds
Receive contributions from employees and/or their employers and invest the proceeds on behalf of the employees for use during their retirement years.
Investment Companies
Sell shares in their firms to individuals and others and invest the pooled proceeds in corporate and government securities.
Mutual Fund
Open-end investment company that can issue an unlimited number of its shares to its investors and use the polled proceeds to purchase corporate and government securities.
Investment Banking Firms
Sell or market new securities issued by businesses to individual and institutional investors.
Brokerage Firms
Assist individuals to purchase new or existing securities issues or to sell previously purchased securities.
Finance Companies
Provide loans directly to consumers and businesses or aid individuals in obtaining financing of durable goods and homes.
Mortgage Banking Firms
Originate mortgage loans on homes and other real property by bringing together borrowers and institutional investors.
Commercial Bank
Accept deposits, issues check-writing accounts, and makes loans to individuals and businesses.
Investment Bank
Helps businesses sell their new debt and equity securities to raise financial capital.
Glass-Steagall Act of 1933
Provided for separation of commercial banking and investment banking activities in the United States.
Gramm-Leach-Bliley Act of 1999
Repealed the separation of commercial banking and investment banking activities provided for in the Glass-Steagall Act.
Universal Bank
Bank that engages in both commercial banking and investment banking activities.
Banking System
Includes commercial banks, savings and loans, savings banks, and credit unions that operate in the U.S. financial system.
Thrift Institutions
Savings and loan associations, savings banks, and credit unions that accumulate individual savings and lend primarily to individuals seeking consumer and mortgage loans.
Savings Bank
Accepts the savings of individuals and lends pooled savings to individuals primarily in the form of mortgage loans.
Savings and Loan Association
Accepts individual savings and lends pooled savings to individuals, primarily in the form of mortgage loans, and businesses.
Credit Union
A cooperative nonprofit organization that exists primarily to provide member depositors with consumer credit.
Dual Banking System
Allows commercial banks to obtain charters either from the federal government or a state government.
Unit Banking
Exists when a bank can have only one full-service office.
Limited Branch Banking
Allows additional banking offices within a geographically defined distance of a bank's main office.
Statewide Branch Banking
Allows banks to operate office throughout a state.
One Bank Holding Companies (OBHCs)
Permits a firm to own and control only one bank.
Multibank Holding Companies (MBHCs)
Permits a firm to own and control two or more banks.
Secured Loan
Loan backed by collateral.
Unsecured Loan
Loan that is a general claim against the borrower's assets.
Prime Rate
Interest rate on short-term unsecured loans to highest-quality business customers.
Certificates of Deposit (CD)
Time deposits with a stated maturity.
Federal Funds
Overnight loans from banks with excess reserves to banks that need to borrow funds to meet minimum reserve requirements.
Bank Liquidity
Reflects ability to meet depositor withdrawals and to pay off other liabilities when due.
Bank Solvency
Reflects ability to keep the value of a bank's assets greater than it liabilities.
Liquidity Risk
Likelihood that a bank will be unable to meet depositor withdrawal demands and other liabilities when due.
Primary Reserves
Vault cash and deposits held at other depository institutions and at Federal Reserve Banks.
Secondary Reserves
Short-term securities held by banks that can be quickly converted into cash at little cost.
Credit (default) Risk
The chance of nonpayment or delayed payment of interest or principal.
Interest Rate Risk
Possible price fluctuations in fixed-rate debt instruments associated with changes in market interest rates.
International Banking
Exists when banks operate in more than one country.