Term
| Types of Depository Instutitions |
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Definition
Commerical banks
Savings & Loans
Mutual savings banks
Credit unions |
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Term
| Types of Contractual Institutions |
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Definition
Life insurance companies
Property & casualty Ins Cos
Pension Funds |
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Term
| Types of Investment Companies |
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Definition
Closed-Ended invest cos
Mutual funds
Money market funds |
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Term
| Other financial institutions |
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Definition
provide go-between functions in the transfer of savings-- do not create their own securities
Security brokers
Security dealers
Investment bankers
Mortgage bankers |
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Term
Surplus Funds Units (Net savers) and
Deficit Funds Units (Net Spenders -- Dis-savers) |
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Definition
From:
Households
Business
Governments
Through:
Financial Institutions
Financial Markets
Direct Transfers
To:
Households
Business
Governments |
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Term
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Definition
| direct finanical claims against individuals, governments, and nonfinancial firms |
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Term
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Definition
| financial liability against financial institution |
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Term
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Definition
| purchase of a primary security |
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Term
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Definition
| purchase of a secondary security |
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Term
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Definition
| interest earned minus interest cost |
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Term
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Definition
| {interest earned - interest cost} / Total Assets |
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Term
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Definition
| condition of inability to cover debt |
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Term
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Definition
| value of liabilities exceeds value of assets; i.e. negative net worth |
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Term
| Characteristics of Financial Instruments: Liquidity |
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Definition
| ease of converting into cash quickly and without loss of value with respect to cash |
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Term
| Characteristics of Financial Instruments: Safety |
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Definition
| freedom from risk of loss of value caused by: default on part of borrower market value decline |
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Term
| Characteristics of Financial Instruments: Yield |
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Definition
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Term
| Types of Intermediation: Denomination |
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Definition
| small denomination borrowing; large denomination lending |
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Term
| Types of Intermediation: Default risk |
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Definition
| lending to risky borrowers; providing safe avenues for savings |
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Term
| Types of Intermediation: Maturity |
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Definition
| lending long term; borrowing short term |
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Term
| Types of Intermediation: Information |
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Definition
| efficiency in collecting and processing |
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Term
| Types of Intermediation: Risk pooling |
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Definition
| nonsystematic risk reduction |
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Term
| Types of Intermediation: Economies of scale |
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Definition
| large operations have low unit cost |
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Term
| Primary Sources & Uses of Funds: Commercial Banks |
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Definition
Source: Transaction & time deposits
Use: Business loans |
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Term
| Primary Sources & Uses of Funds: Savings & Loan Assns |
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Definition
Source:Time deposits
Use:Residential mortgages |
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Term
| Primary Sources & Uses of Funds: Savings Banks |
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Definition
Source:Time deposits
Use:Residential mortgages |
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Term
| Primary Sources & Uses of Funds: Credit Unions |
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Definition
Source:Time deposits
Use: Consumer loans |
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Term
| Primary Sources & Uses of Funds: Life Insurance Co |
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Definition
Source: Policies
Use: Corporate bonds and Commercial mortgages |
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Term
| Primary Sources & Uses of Funds: Property/Casualty Ins Cos |
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Definition
Source: Policies
Use: Municipal bonds |
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Term
| Primary Sources & Uses of Funds: Private Pension Funds |
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Definition
Source: Pension plans
Use: Corporate stock |
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Term
| Primary Sources & Uses of Funds: Mutual Funds |
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Definition
Source: Shares
Use: Corporate stock |
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Term
| Primary Sources & Uses of Funds: Money Market Funds |
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Definition
Source: Shares
Use: Money market instruments |
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Term
| Primary Sources & Uses of Funds: Consumer Finance Cos. |
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Definition
Source:Bank loans
Use: Consumer loans |
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Term
| Primary Sources & Uses of Funds: Business Finance Cos. |
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Definition
Source: Bonds
Use:Business loans |
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Term
| Primary Sources & Uses of Funds: Government (State & Local) Pension Funds |
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Definition
Source: Pension plans
Use:Corporate bonds |
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