Financial Institutions and Transactions
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22 terms
Terms | Definitions |
|---|---|
 bank | A depository institution where one can keep and borrow money and take care of financial affairs; two types are commercial and investment. |
| compound interest | interest calculated on both the principal and the accrued interest |
| Federal Reserve | The central bank of the United States. "The Fed" incorporates 12 branch banks, along with all the national banks, all state-chartered commercial banks, and some trust companies. It can regulate the money supply through various tools such as the discount rate & reserve ratio and through open-market operations. |
| Federal Deposit Insurance Corporation (FDIC) | An agency of the U.S. that promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000; by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effect oon the economy and the financial system when a bank or thrift instutution fails. |
| finance | The science or study of the management of money, credit, banking, and investments. |
| financial advisor | A professional who provides financial planning and advice on financial matters. |
| financial literacy | The ability of individuals to make appropriate decisions in managing their personal finances. |
| financial services industry | Financial institutions that help consumers, businesses, and governments manage money. These institutions can be depository or not. |
| future value | What an amount invested today at a particular interest rate will be worth in the future. |
| insurance company | A financial institution that protects persons against the risk of financial loss. |
| interest | Cost of borrowing money expressed as a percentage of the amount borrowed. |
| National Credit Union Administration (NCUA) | An independent federal agency that serves to supervise and regulate federal credit unions. It also provides account insurance for many state-chartered credit unions through the National Credit Union Share Insurance Fund. |
| present value | The value of a future cash stream discounted at the appropriate market interest rate. |
| risk | The degree of uncertainty of return on an asset; the possibility of loss. |
| simple interest | The amount of interest based on a principal amount and not on earned interest. |
| time value of money | Money's potential to grow in value over time. The relationship between time, money, a rate of return, and earnings growth. |
| thrifts | Depository institutions that include savings and loans, savings banks, and credit unions. They specialize in saving accounts and real estate financing. |
| savings and loan | Depository financial institutions that specialize in home mortgage loans; it is required by law to make a certain percentage of its loans as home mortgages |
| pension funds | Financial providers that specialize in gathering payments (from corporations, unions, governments, and non-profits) into retirement funds, and investing those payments so that they may accumulate to an amount that provides enough income at retirement for beneficiaries. |
| mutual funds | An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. |
| financial intermediary | An institution that acts as a service for both those who have extra money to save or lend and channels it to those who wish to invest or borrow. |
| capital | A term used to define the financial resources that are used to make money, which can take the form of equity or debt. |
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