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79 Cards in this Set
- Front
- Back
depository institution |
financial institution that accepts deposits (which are insured up to a maximum level) from individuals and provide loans |
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commercial banks |
financial institutions that accept deposits and use the funds to provide commercial (business) and personal loans |
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savings institutions |
financial institutions that accept deposits and provide mortgage and personal loans to individuals |
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credit unions |
nonprofit depository institutions that serve members who have a common affiliation (such as the same employer or the same community) |
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nondepository institutions |
financial institutions that do not offer federally insured deposit accounts, but provide various other financial services |
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finance companies |
nondepository institutions that specialize in providing personal loans to individuals |
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securities firms |
nondepository institutions that facilitate the purchase or sale of securities by firms or individuals by providing investment baking services and brokerage services |
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insurance companies |
nondepository institutions that provide insurance to protect individuals or firms form possible adverse events |
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investment companies |
nondepository institutions the sell shares to individuals and use the proceeds to invest in securities to create mutual funds |
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financial conglomerates |
financial institutions that offer a diverse set of financial services to individuals or firms |
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safety deposit box |
a box at a financial institution where a customer and store documents, jewelry, and other valuables |
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automatic teller machine |
a machine where individuals can deposit and withdraw funds any time of the day |
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cashier's checks |
a check that is written on behalf of a person to a specific payee and will be charged against a financial institution's account |
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debit card |
a card that is used to make purchases that are charged against a checking account |
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money order |
a check that is written on behalf of a person for a fixed amount that is paid in advance |
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traveler's checks |
a check that is written on behalf of an individual and will be charged against a large well-known financial institution or credit card sponsor's account |
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certificate of deposit |
an instrument that is issued by a depository institution and specifies a minimum investment, an interest rate, and a maturity date |
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risk-free rate |
a return on an investment that is guaranteed for a specified period |
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risk premium |
an additional return beyond the risk-free rate that can be earned from a deposit guaranteed by the government |
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term structure of interest rates |
the relationship between the maturities of risk-free debt securities and the annualized yields offered on those securities |
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money supply |
demand deposits (checking accounts) and currency held by the public |
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monetary policy |
the actions taken by the Federal Reserve to control the money supply |
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open market operations |
the Fed's buying and selling of Treasury securities |
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money management |
a series of decisions made over a short-term period regarding cash inflows and outflows |
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liquidity |
your ability to cover and cash deficiencies that you may experience |
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overdraft protection |
a arrangement that protects a customer who writes a check for an amount the exceeds the checking account balance; it is a short-term loan from the depository institution where the checking account is maintained |
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stop payment |
a financial institution's notice that it will not honor a check if someone tries to cash it; usually occurs in response to a request by the writer of the check |
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NOW account |
a typ of deposit offered by depository institutions that provides checking services and pays interest |
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retail CD's |
certificates of deposits that have small denominations (such as 5,000 or 10,000) |
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money market deposit account |
a deposit offered by a depository institution that requires a minimum balance, has no maturity date, pays interest, and allows a limited number of checks to be written each month |
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treasury securities |
debt securities issued by the US Treasury |
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Treasury Bills (T-bills) |
treasury securities with maturities of one year or less |
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secondary market |
a market where existing securities such as Treasury bills can be purchased and sold |
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money market funds |
accounts that pool money from individuals and invest in securities that have a short-term maturity, such as one year or less |
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commercial paper |
short-term debt securities issued by rage corporations that typically offer a slightly higher return than Treasury bills |
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asset management account |
an account that combines deposit accounts with a brokerage and provides a single consolidated statement |
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sweep account |
an asset management account that sweeps and unused balance in the brokerage account into a money market investment at the end of each business day |
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credit risk |
the risk that a borrower may not repay on a timely basis |
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interest rate risk |
the risk that the value of an investment could decline as a result of a change in interest rates |
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liquidity risk |
the potential loss that could occur as a result of converting an investment into cash |
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credit |
fund provided by a creditor to a borrower that will be repaid by the borrower in the future with interest |
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non-installment credit |
credit provided for a short period, such as department store credit |
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installment credit |
credit provided for specific purchases with interest charged on the amount borrowed |
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revolving open-end credit |
credit provided up to a specified maximum amount based on income and credit history; interest is charged each month on the remaining balance |
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credit reports |
reports provided by credit bureaus to document a person's credit payment history |
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identity theft |
theft that occurs when an individual, without permission, uses your identifying information for his or her personal gain |
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shoulder surfing |
tactic used when an identity their stands close to you in a place and reads the number of your credit cards as you conduct business |
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dumpster diving |
tactic used when an identity thief goes through your trash for discarded items the reveal personal information that can be used for fraudulent purposes |
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skimming |
tactic used when a store employee steals your credit card number by copying the information contained in the magnetic strip on the card |
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pretexting |
tactic used when an identity their poses as an employee of a company with you conduct business, to solicit your personal information |
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phising |
tactic used when pretexting happens online |
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pharming |
similar to phishing, but targeted to larger audiences; tactic that directs users to boughs Web sites to collect their personal information |
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retail credit card |
a credit card that s honored only by a specific retail establishment |
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prestige card |
credit cards, such as gold or platinum cards, issued by a financial institution to individuals who have an exceptional credit standing |
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financial charge |
the interest that you must pay as a result of using credit |
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simple interest rate |
the percentage of credit that must be paid as interest on an annual basis |
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annual percentage rate |
the simple interest rate including any fees charged by the creditor |
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personal bankruptcy |
a plan proposed to the court in which you repay at least a portion of your debt and pay attorney and filing fees |
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loan contract |
a contract that specifies the terms of a loan, as agreed to by the borrower and the lender |
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amortize |
to repay the principal of a loan (the original of the loan payed out) through a series of equal payments. a loan repaid in this manner is said to be amortized |
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maturity |
with respect to a loan, the life or duration of the loan |
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collateral |
assets of a borrower that back a secured loan in the event that the borrower defaults |
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secured loan |
a loan that is backed or secured by collateral |
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unsecured loan |
a loan that is not backed by collateral |
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annual percentage rate |
a rate that measures the finance expenses on a loan annually |
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simple interest |
interest on a loan computed as a percentage of the existing loan amount (or principle) |
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add-on interest method |
a method of determining the monthly payment on a loan; involves calculating interest that must be paid on the loan amount, adding together the interest and loan principal, and dividing by the number of payments |
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tudent loan |
a loan provided to finances part of the expenses a student incurs while pursuing a degree |
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home equity loan |
loan where the equity in a home serves as collateral for the loan |
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equity of a home |
the market value of a home minus the debt owed on the home |
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payday loan |
a short-term loan provided in advance of a paycheck |
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points |
a fee charged by the lender when a mortgage loan in provided; stated as a percentage of the mortgage loan amount |
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fixed-rate mortgage |
a mortgage in which a fixed interest rate is specified until maturity |
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adjustable-rate mortgage |
a mortgage where the interest owed changes in response to movements in a specific market-determined interest rate |
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caps |
maximum and minimum fluctuations in the interest rate on an adjustable-rate mortgage |
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graduate payment mortgage |
a mortgage where the payments are low in the early years and then rise to a higher level over time |
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balloon payment mortgage |
a mortgage where the monthly patients are relatively low, but one large payment is required after a specific period to play off the mortgage loan |
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mortgage refinancing |
lying off an existing mortgage with a new mortgage that has a lower interest rate |
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Depository institutions collect ___________ and issue _________ |
deposits, loans |