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Study key terms and their definitions for Text A


Banker's acceptanceor BA, is a promised future payment, or time draft, which is accepted and guaranteed by a bank and drawn on a deposit at the bank. The banker's acceptance specifies the amount of money, the date, and the person to which the payment is due.

Brokerage firmis a business, a firm, or company whose business is to act as a broker.

Commercial bankis a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets.

Commercial paperis an unsecured promissory note with a fixed maturity of 1 to 364 days. Commercial paper is a money-market security issued (sold) by large corporations to get money to meet short term debt obligations (for example, payroll), and is only backed by an issuing bank or corporation's promise to pay the face amount on the maturity date specified on the note.

Denominationis a unit in a series of units of weight, money, etc.

Durable goodsaregoods that do not quickly wear out.

Economies of scaleare the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producerís average cost per unit to fall as the scale of output is increased.

Federal funds are overnight borrowings by banks to maintain their bank reserves at the Federal Reserve. Banks keep reserves at Federal Reserve Banks to meet their reserve requirements and to clear financial transactions.

Federal Reserveis the central banking system of the United States.

To matureis to reach the date when payment is due.

Money market instrumentis a short-term investment into which one deposits cash and receives the return in 90 days or less.

Money marketis a market for trading short-term debt instruments, such as treasury bills, commercial paper, bankers' acceptances, and certificates of deposit.

Mutual fundisa type of professionally-managed collective investment scheme that pools money from many investors to purchase securities

Negotiable certificates of deposit (CDs)is a time deposit, a financial product commonly offered to consumers in the United States by banks, thrift institutions, and credit unions. CDs are similar to savings accounts in that they are insured and thus virtually risk free.

Open market operations:The Federal Reserveís purchases and sales of securities, usually U.S. Treasury securities, in financial markets.

Property and casualty insurance companies -Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance or boiler insuranceCasualty insurance, often equated to liability insurance, is used to describe an area of insurance not directly concerned with life insurance, health insurance, or property insurance. It is mainly used to describe the liability coverage of an individual or organization's for negligent acts or omissions.

Repurchase agreementalso known as a repo, RP, or sale and repurchase agreement, is the sale of securities together with an agreement for the seller to buy back the securities at a later date. The repurchase price should be greater than the original sale price, the difference effectively representing interest, sometimes called the repo rate.

Thriftsare financial institutions that specialize in accepting savings deposits and making mortgage and other loans. The terms "S&L" or "thrift" are mainly used in the United States; similar institutions in the United Kingdom, Ireland and some Commonwealth countries include building societies and trustee savings banks.

Time depositis a money deposit at a banking institution that cannot be withdrawn for a certain "term" or period of time (unless a penalty is paid).

Treasury billsare short-term debt obligations backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of$5 million and commonly have maturities of one month (four weeks), three months (13 weeks) or six months (26 weeks). (or T-Bills) mature in one year or less.

Treasury Department is a government department related to finance and taxation.

Wholesale markets are marketsof goods sold to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services.


Date: 2015-12-24; view: 682

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