Study sets matching "banking chapter 10"
Study sets
Diagrams
Classes
Users
types of financial innovation
Response to Changes in Demand Conditions
Interest Rate Volatility
Adjustable-Rate Mortgages
1. responses to changes in demand conditions, ... 2. responses to…
- Interest Rate Volatility... - Adjustable-Rate Mortgages... - Finan…
We would expect the increase in interest-rate risk to increase…
Initially, an adjustable-rate mortgage might have a 5% interes…
types of financial innovation
1. responses to changes in demand conditions, ... 2. responses to…
Response to Changes in Demand Conditions
- Interest Rate Volatility... - Adjustable-Rate Mortgages... - Finan…
bank failure
bank panic
too-big-to-fail problem
leverage ratio
A situation in which a bank cannot satisfy its obligations to…
The simultaneous failure of many banks, as during a financial…
Problem in which regulators are reluctant to close down large…
A bank's capital divided by its assets.
bank failure
A situation in which a bank cannot satisfy its obligations to…
bank panic
The simultaneous failure of many banks, as during a financial…
money
medium of exchange
barter
unit of account
Anything that serves as a medium of exchange, a unit of accoun…
anything that is used to determine value during the exchange o…
The direct exchange of one set of goods or services for another
a means for comparing the values of goods and services
money
Anything that serves as a medium of exchange, a unit of accoun…
medium of exchange
anything that is used to determine value during the exchange o…
Maturity date
Face value
Debenture
Mortgage bond
The date when a bond will be repaid.
The dollar amount that the bondholder will receive at the bond…
A bond that is backed only by the reputation of the issuing co…
A bond that is backed by assets of the corporation, also calle…
Maturity date
The date when a bond will be repaid.
Face value
The dollar amount that the bondholder will receive at the bond…
Hedge
Bank Holding Company
Results of financial crisis
Glass-Steagall Banking Act of 1933
an investment to reduce the risk of adverse price movements in…
a company that controls one or more banks, but does not necess…
1) The Fed pushed Bear Stearns into the arms of J.P. Morgan to…
Enacted after Stock Market Crash of 1929 to protect depositors…
Hedge
an investment to reduce the risk of adverse price movements in…
Bank Holding Company
a company that controls one or more banks, but does not necess…
Federal Reserve System (Fed)
Federal Reserve notes
barter economy
commodity money
privately owned, publicly controlled, central bank of the Unit…
paper currency issued by the Fed that eventually replaced all…
moneyless economy that relies on trade or barter
money that has an alternative use as an economic good; gunpowd…
Federal Reserve System (Fed)
privately owned, publicly controlled, central bank of the Unit…
Federal Reserve notes
paper currency issued by the Fed that eventually replaced all…
Federal Reserve System (Fed)
Federal Reserve notes
barter economy
commodity money
privately owned, publicly controlled, central bank of the Unit…
paper currency issued by the Fed that eventually replaced all…
moneyless economy that relies on trade or barter
money that has an alternative use as an economic good; gunpowd…
Federal Reserve System (Fed)
privately owned, publicly controlled, central bank of the Unit…
Federal Reserve notes
paper currency issued by the Fed that eventually replaced all…
Macroeconomics
Money
3 Functions of money
Medium of exchange
study of the behavior of the economy as a whole and how major…
anything that people will accept in exchange for goods and ser…
1. Medium of Exchange 2. Standard of Value 3. Store of Value
a means through which goods and services can be exchanged.
Macroeconomics
study of the behavior of the economy as a whole and how major…
Money
anything that people will accept in exchange for goods and ser…
Federal Reserve System (Fed)
Federal Reserve notes
barter economy
commodity money
privately owned, publicly controlled, central bank of the Unit…
paper currency issued by the Fed that eventually replaced all…
moneyless economy that relies on trade or barter
money that has an alternative use as an economic good; gunpowd…
Federal Reserve System (Fed)
privately owned, publicly controlled, central bank of the Unit…
Federal Reserve notes
paper currency issued by the Fed that eventually replaced all…
Macroeconomics
Money
3 Functions of money
Medium of exchange
study of the behavior of the economy as a whole and how major…
anything that people will accept in exchange for goods and ser…
1. Medium of Exchange 2. Standard of Value 3. Store of Value
a means through which goods and services can be exchanged.
Macroeconomics
study of the behavior of the economy as a whole and how major…
Money
anything that people will accept in exchange for goods and ser…
Investments
Security Portfolio
Written investment policy
Money market instruments
These act as a crossroads account. Stand between cash, loans,…
This helps a bank by ... 1) stabilize the income by balancing out…
Where must a bank specify the following items?... 1) The quality/…
These are low risk and mature within one year. There are 8 maj…
Investments
These act as a crossroads account. Stand between cash, loans,…
Security Portfolio
This helps a bank by ... 1) stabilize the income by balancing out…
labor force
labor-force participation rate
unemployment rate
labor productivity
the supply of workers, which consists of people who are either…
ratio of the labor force to the working age population
the number of unemployed workers as a fraction of the labor fo…
a measure of productivity per worker, calculated as output div…
labor force
the supply of workers, which consists of people who are either…
labor-force participation rate
ratio of the labor force to the working age population
Bank Failure
Bank Panic
Too Big To Fail Problem
Leverage Ratio
A bank is unable to meet the obligations to pay its depositors…
Depositors lack of information about the quality of bank asset…
Regulators are reluctant to close down large financial institu…
The amount of capital divided by the bank's total assets
Bank Failure
A bank is unable to meet the obligations to pay its depositors…
Bank Panic
Depositors lack of information about the quality of bank asset…
barter economy
commodity money
fiat money
Federal Reserve System (Fed)
a moneyless economy that relies on trade
money that has an alternative use as an economic good--corn, h…
money by government decree
privately owned, publically controlled, central bank of the Un…
barter economy
a moneyless economy that relies on trade
commodity money
money that has an alternative use as an economic good--corn, h…
Refinancing
Fannie Mae and Freddie Mac
Put-Backs
Primary Deposits
taking out new loans at lower interest rates to replace existi…
government sponsored enterprises that Congress established to…
required banks to repurchase defaulted mortgages that failed t…
sources of funds
Refinancing
taking out new loans at lower interest rates to replace existi…
Fannie Mae and Freddie Mac
government sponsored enterprises that Congress established to…
Information Security Program
By protecting customer's information an…
Two security measures banks employ to p…
Types of authentication methods
a plan for ensuring the data and technology systems are not ac…
peace of mind
Direct Deposit and passwords
something the user knows-password... something the user has-ATM C…
Information Security Program
a plan for ensuring the data and technology systems are not ac…
By protecting customer's information an…
peace of mind
Information Security Program
By protecting customer's information an…
Two security measures banks employ to p…
Types of authentication methods
a plan for ensuring the data and technology systems are not ac…
peace of mind
Direct Deposit and passwords
something the user knows-password... something the user has-ATM C…
Information Security Program
a plan for ensuring the data and technology systems are not ac…
By protecting customer's information an…
peace of mind
Information Security Program
By protecting customer's information an…
Two security measures banks employ to p…
Types of authentication methods
a plan for ensuring the data and technology systems are not ac…
peace of mind
Direct Deposit and passwords
something the user knows-password... something the user has-ATM C…
Information Security Program
a plan for ensuring the data and technology systems are not ac…
By protecting customer's information an…
peace of mind
money
medium of exchange
unit of account
store of value
Anything that serves as a medium of exchange, a unit of accoun…
anything that is used to determine value during the exchange o…
a means for comparing the values of goods and services
something that keeps its value if it is stored rather than used
money
Anything that serves as a medium of exchange, a unit of accoun…
medium of exchange
anything that is used to determine value during the exchange o…
Bank Balance Sheet (Liabilities)
Bank Balance Sheet (Assets)
Asset Management 3 Goals
Asset Management- Four Tools
Checkable Deposits... Non transaction deposits... Borrowings... Bank Ca…
Loans... Securities... Reserves... Deposits at other banks... A/R
Seek Highest Possible returns on Secirities/Loans... Have Adequat…
Find borrowers who wil pay high interest & wont default... Invest…
Bank Balance Sheet (Liabilities)
Checkable Deposits... Non transaction deposits... Borrowings... Bank Ca…
Bank Balance Sheet (Assets)
Loans... Securities... Reserves... Deposits at other banks... A/R
Money
Medium of Exchange
Barter
The 3 uses of Money
Anything that serves as a medium of exchange, a unit of accoun…
Anything that is used to determine value during the exchange o…
The direct exchange of one set of goods or service for another.
1. Medium of Exchange... 2. Store of Value... 3. Unit of Account
Money
Anything that serves as a medium of exchange, a unit of accoun…
Medium of Exchange
Anything that is used to determine value during the exchange o…
balance sheet
Balance Sheet Accounting Equation
asset
liability
a statement of value that an individual or a firm owns; in par…
assets = liabilities + shareholder's equity
something of value that an individual or a particular firm own…
something that an individual or a firm owes, particularly a fi…
balance sheet
a statement of value that an individual or a firm owns; in par…
Balance Sheet Accounting Equation
assets = liabilities + shareholder's equity
Information Security Program
By protecting customer's information an…
Two security measures banks employ to p…
Types of authentication methods
a plan for ensuring the data and technology systems are not ac…
peace of mind
Direct Deposit and passwords
something the user knows-password... something the user has-ATM C…
Information Security Program
a plan for ensuring the data and technology systems are not ac…
By protecting customer's information an…
peace of mind
Bank Capital
Bank Liabilities
Types of Transaction Deposits
Demand Deposits
Assets - Liabilities
Transaction, non transaction deposits, borrowings
Checkable, demand deposits, NOW
Checkable deposits that banks don' pay interest on
Bank Capital
Assets - Liabilities
Bank Liabilities
Transaction, non transaction deposits, borrowings
Information Security Program
peace of mind
Direct Deposit and passwords
Types of authentication methods
a plan for ensuring the data and technology systems are not ac…
By protecting customer's information and privacy, banks provid…
Two security measures banks employ to prevent unauthorized acc…
something the user knows-password... something the user has-ATM C…
Information Security Program
a plan for ensuring the data and technology systems are not ac…
peace of mind
By protecting customer's information and privacy, banks provid…