Chapter 8 Terms and Definitions

Terms in this set (16)

Annual Percentage Yield (APY)
the actual interest rate an account pays per year, calculated the same way by all banks
Bond
a written promise to pay a debt by a specified date
Certificate of Deposit (CD)
a deposit in a savings institution that earns a fixed interest rate for a specified period of time
Commercial Bank
A financial institution that serves individuals and businesses with a wide variety of accounts, loans, and other financial services
Compound Interest
interest paid on the principal and also on previously earned interest, assuming that the interest is left in the account
Credit Union
a financial institution that provides banking services to its members, who are people who share a common bond, such as a certain profession, church group, or labor union
Dividend
portion of a company's profits paid to the owners
Face Value
the dollar value printed on a bond
Money Market Account
a deposit for which the interest rate changes over time as interest rates in the economy change
Principal
money on deposit
Saving
trading current spending for the ability to spend in the future
Savings Account
an account at a banking institution in which you may deposit money, earn interest, and withdraw your funds at any time
Savings and Loan Association
a financial institution that specializes in lending money to buy homes
Savings Bank
a financial institution owned by its depositors
Savings Bond
U.S. government bonds issued for amounts of $50 to $10,000
Simple Interest
interest paid one time per year at the end of the year on the average balance in the savings account
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