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Financial Markets: Chapter 10
Terms in this set (31)
Anything of value owned by a person or a firm; in particular, a financial claim.
A statement that shows an individual's or a firm's financial position on a particular day.
The difference between the value of a bank's assets and the value of its liabilities; also called shareholder's equity.
The ratio of the value of a bank's assets to the value of its capital, the inverse of which (capital to assets) is called a bank's leverage ratio.
Accounts against which depositors can write checks.
The restriction of credit by lenders such that borrowers cannot obtain the funds they desire at the given interest rate.
The risk that borrowers might default on their loans.
The process that bank loan officers use to screen loan applicants.
Dual Banking System
The system in the United States in which banks are chartered either by a state government or the federal government.
An analysis of how sensitive a bank's capital is to changes in market interest rates.
Any reserves banks hold above those necessary to meet reserve requirements.
Federal Deposit Insurance
A government guarantee of deposit account balances up to $250,000.
An analysis of the difference, or gap, between the dollar value of a bank's variable-rate assets and the dollar value of its variable-rate liabilities.
The risk that the price of a financial asset will fluctuate in response to changes in market interest rates.
A measure of how much debt an investor assumes in making an investment.
Something that an individual or a firm owes, particularly a financial claim on an individual or a firm.
The possibility that a bank may not be able to meet its cash needs be selling assets or raising funds at a reasonable cost.
An agreement by a bank to provide a borrower with a stated amount of funds during a specified period of time.
A financial contract in which a bank agrees to sell the expected future returns from an underlying bank loan to a third party.
A federally chartered bank.
Net Interest Margin
The difference between the interest a bank receives on its securities and loans and the interest it pays on deposits and debt, divided by the total value of its earning assets.
Activities that do not affect a bank's balance sheet because they do not increase either the bank's assets or its liabilities.
Formerly, the interest rate banks charged on six-month loans to high-quality borrowers; currently, an interest rate banks charge primarily to smaller borrowers.
Reserves that the Fed requires banks to hold against demand deposit and NOW account balances.
A bank asset consisting of vault cash plus bank deposits with the Federal Reserve.
Return of Assets (ROA)
The ratio of the value of a bank's after-tax profit to the value of its assets.
Return of Equity (ROE)
The ratio of the value of a bank's after-tax profit to the value of its capital.
Standby Letter of Credit
A promise by a bank to lend funds, if necessary, to a seller of commercial paper at the time that the commercial paper matures.
An accounting tool used to show changes in balance sheet items.
Troubled Asset Relief Program (TARP)
A government program under which the U.S. Treasury purchased stock in hundreds of banks to increase the bank's capital.
Cash on hand in a bank; includes currency in ATM's and deposits with other banks.
THIS SET IS OFTEN IN FOLDERS WITH...
Financial Markets: Chapter 1
Financial Markets: Chapter 2
Financial Markets: Chapter 3
Financial Markets: Chapter 4
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