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22 terms

Financial Institutions and Transactions

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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.