Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Money And Banks > Additional Part > Flashcards

Additional Part Flashcards

1
Q

What are depository institutions?

A

Financial institutions that obtain funds mainly through deposits from the public and use them to make loans to other customers.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Name an example of a depository institution that offers banking services and products to the general public, including investing clients’ money and providing financial consultations.

A

Commercial banks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Name two examples of commercial banks in Egypt.

A

The National Bank of Egypt (NBE) and the Commercial International Bank (CIB)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What distinguishes Islamic banks from other banks?

A

Islamic banks operate within the framework of Islamic Sharia law and impose a variable interest rate instead of a fixed interest rate. They also use different names for banking transactions, such as “Murabaha” and “Modaraba.”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Provide two examples of Islamic banks in Egypt.

A

Faisal Islamic Bank of Egypt and Al Baraka Bank

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are savings and loan associations?

A

Savings and loan associations (VSLAS) are financial organizations that enable low-income and marginalized individuals, particularly women in rural communities, to participate in savings and lending groups and invest in income-generating activities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Why have credit unions not been widely introduced or used in Egypt?

A

Credit unions have not been widely introduced or used in Egypt due to cultural factors discouraging savings, a general lack of capital, and individuals opting for commercial banks with higher interest rates.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the role of central banks?

A

Central banks are responsible for implementing monetary policy, managing a country’s currency, and controlling the money supply. They aim to achieve economic balance and are not profit-oriented like commercial or investment banks. Central banks also decide the interest rates on loans and deposits and have the authority to print money.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are contractual savings institutions?

A

Financial intermediaries that acquire funds on a contractual basis at periodic intervals. They primarily invest in long-term securities such as corporate bonds, stocks, and mortgages.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Name one type of contractual savings institution that offers direct insurance or reinsurance services, providing financial protection from possible future hazards.

A

Life Insurance Companies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Provide two examples of life insurance companies in Egypt.

A

Delta Insurance and Metalife Aleko Insurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What type of insurance product plays a role in safeguarding property and liabilities to third parties, as well as compensating for damages caused by insured risks such as theft, fire, and accidents?

A

Fire and Casualty Insurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Name one company that offers fire and casualty insurance in Egypt.

A

Al Mashreq Insurance or AXA Egypt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a pension fund?

A

A pension fund is a plan, fund, or scheme that provides retirement income, typically set up by employers, unions, or other organizations to provide retirement benefits to their employees or members.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How do pension funds generate returns?

A

Pension funds pool monetary contributions and invest them into the capital markets, such as stock and bond markets, to generate profits and returns.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Provide an example of a pension fund in Egypt.

A

Azimut Egypt or Allianz

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What are finance companies? Provide examples of different types of finance companies in Egypt.

A

Finance companies are intermediaries that operate in various categories such as consumer finance, financial leasing, financial factoring, and real estate finance. Examples in Egypt include ValU (consumer finance), BM Lease (financial leasing), EFG HERMES Corp Solutions (financial factoring), and Al Ahly Mortgage Finance (real estate finance).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is the main function of mutual funds? Differentiate between equity funds, Islamic equity funds, and fixed income funds, and provide examples of mutual funds in Egypt.

A

Mutual funds acquire funds by selling shares to individuals and invest the proceeds in diversified portfolios of stocks and bonds. Equity funds focus on stocks, Islamic equity funds adhere to Sharia principles, and fixed income funds invest in bonds. Examples of mutual funds in Egypt include Banque du Caire Mutual Fund (equity fund), Al Baraka Bank Islamic Fund (Islamic equity fund), and Bank of Alexandria Money Market Fund No. 3 (fixed income fund).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are hedge funds, and how do they differ from mutual funds?

A

Hedge funds are limited partnerships of private investors with significant capital. They aim to earn above-average investment returns using various techniques. Hedge funds are less regulated than mutual funds and typically cater to wealthy individuals. Shares in hedge funds may have lock-in periods before they can be redeemed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is the role of investment banks, and provide examples of investment banks in Egypt.

A

Investment banks specialize in underwriting and consulting for corporations seeking to raise capital. They act as intermediaries in the primary market and provide financial advice to large institutions. Examples of investment banks in Egypt include the National Investment Bank and the Arab Investment Bank.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What are money market mutual funds, and why are they designed to meet the needs of small investors? Give examples of money market mutual funds in Egypt.

A

Money market mutual funds invest in high-quality, short-term debt instruments and cash equivalents. They offer features suited to the needs of small investors and provide high liquidity. Examples of money market mutual funds in Egypt include QNB Al Ahli Money Market Fund - Themar, AIB Money Market Fund, Ahli United Bank Money Market Fund – Tharwa, and HSBC Money Market Fund.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What are the two types of bonds in the Egyptian bond market? Give examples of each.

A

The two types of bonds in the Egyptian bond market are government bonds and corporate bonds. Government bonds include treasury bonds, housing bonds, and development bonds. Examples of corporate bonds are fixed rate bonds (such as EFG Hermes Securitization The First Issue-Fourth Program Tranche) and floating rate bonds (such as Golden Pyramids Plaza - 2nd Bond).

23
Q

What is a fund? Explain the characteristics of closed-end mutual funds.

A

A fund is an investment vehicle that collects money from multiple investors, which is then used by fund managers to invest in stocks and bonds. Closed-end mutual funds are traded freely on an exchange, such as EGX, and behave like common stocks. The total size of a closed-end fund does not change with investor activity, and investors can buy or sell certificates of the fund through member or brokerage firms.

24
Q

What are structured products, and why were they created?

A

Structured products are financial instruments that are based on a single security or a basket of securities, options, indices, or commodities. They were created to meet specific needs that cannot be fulfilled by standardized financial instruments available in the market. Structured products can be used as an alternative investment, to reduce portfolio risk exposure, or to take advantage of current market trends.

25
Q

What is a mortgage, and what types of mortgages are available in Egypt?

A

A mortgage is the process by which individuals or institutions obtain funds to invest in residential, administrative, or commercial real estate, with the property serving as collateral. In Egypt, there are various types of mortgages, including financing for purchasing, construction, restoration, or improvement of different types of properties. Islamic forms of mortgages, such as Ijara financing and Murabaha financing, are also available.

26
Q

Explain the difference between common stock and preferred stock.

A

Common stock, also known as ordinary stock, represents partial ownership of a company and provides the owner with the right to share in the company’s profits. However, common shareholders have lower priority than preferred shareholders when it comes to receiving dividends or payouts in case of bankruptcy. Preferred stock grants additional rights to the shareholder compared to common stock, such as voting or liquidation preferences, as defined by the company’s by-laws.

27
Q

Provide examples of companies offering their shares for sale in Egypt.

A

Examples of companies offering their shares for sale in Egypt include Abu Dhabi Islamic Bank-Egypt and Arab Co. for Asset Management and Development.

28
Q

What are money markets, and what types of short-term debt are commonly used in these markets?

A

Money markets are financial markets where short-term debt instruments are traded. Common types of short-term debt used in money markets include short-term bonds, bank loans, accounts payable, wages, lease payments, and income taxes payable.

29
Q

How does the Financial Regulatory Authority (FRA) aim to revitalize the Egyptian corporate bond market?

A

The FRA has introduced new rules that allow listed companies, limited liability companies, banks, financial institutions, and small and medium-sized enterprises to sell short-term government bonds with a maturity of less than two years to retail and institutional investors.

30
Q

What is the role of capital markets, and how are they regulated in Egypt?

A

Capital markets are viewed as a means of channeling savings into investment channels and reflecting overall economic performance. In Egypt, the Capital Market Law No. 95 of 1992 regulates the capital markets, and the Capital Market Authority (CMA) has the legal authority and status to enforce securities market legislation and regulation.

31
Q

How are securities issued in capital markets, and what are the rules regarding nominal shares in joint stock companies?

A

In capital markets, the capital of joint stock companies and shares of dormant partners in companies with a limited number of shares are divided into nominal shares of equal value. Bearer shares can also be issued within certain limits and specific terms and conditions. The value of a nominal share is determined by the company’s articles of association, with a minimum value of LE5.00 and a maximum value of LE1,000.

32
Q

What is the primary equity market and exchange in Egypt, and what activities does it specialize in?

A

The Egyptian Exchange (EGX) is the primary and secondary equity market and exchange in Egypt. It specializes in securities-related activities required by the Egyptian Financial Supervisory Authority, including issuing bonds, investment management, and dual securities listing

33
Q

What is the primary market, and why is price manipulation less likely in this market compared to the secondary market?

A

The primary market is where newly issued securities are sold to investors. Price manipulation is less likely in the primary market because securities are purchased directly from the companies that originate them, reducing the involvement of intermediaries.

34
Q

What is the role of Misr for Central Clearing, Depository, and Registry (MCDR) in Egypt’s primary market?

A

MCDR’s main priority is to implement the central depository system, maintain records of securities traded in Egypt, and apply the delivery vs. payment system, which enhances efficiency and transparency in the market.

35
Q

What is the secondary market, and how does it differ from the primary market?

A

The secondary market is where investors trade previously issued securities among themselves without the involvement of the issuing companies. It is commonly known as “The Stock Exchange Market” and involves brokers and dealers facilitating trades.

36
Q

What are the Egyptian Exchange’s historical origins, and what is Nilex?

A

The Egyptian Exchange traces its roots back to the nineteenth century, with the establishment of the Alexandria Exchange in 1883 and the Cairo Exchange in 1903, which is now known as the Egyptian Exchange. Nilex is a market within the Egyptian Exchange that focuses on evolving medium and small businesses.

37
Q

What is a commodity market, and how does the pricing mechanism work in this market in Egypt?

A

A commodity market is a marketplace where raw materials or primary products are bought, sold, and traded. In Egypt, the government and other entities supervise the commodity market and set restrictions on trading. Prices in the market are determined by the supply and demand mechanism, influenced by investors, dealers, buyers, and sellers of commodities.

38
Q

What distinguishes exchange markets from over-the-counter (OTC) markets?

A

Exchange markets are physical or virtual meeting places where brokers gather to conduct trades, while OTC markets involve market dealers trading securities from various locations, often online, without a centralized physical location

39
Q

What are EGP T-Bills, and who issues them in Egypt?

A

EGP T-Bills are short-term debt instruments issued by The Central Bank of Egypt on behalf of the Ministry of Finance. They come with maturities of 3, 6, 9, or 12 months and are highly liquid, tradable in the secondary market.

40
Q

What is a Certificate of Deposit (CD), and what types of deposit operations does the Central Bank of Egypt offer?

A

A Certificate of Deposit is a savings certificate with a fixed maturity date issued by a bank, typically with a fixed or variable interest rate. The Central Bank of Egypt offers fixed rate deposits, variable rate deposits, and corridor linked deposits as types of deposit operations.

41
Q

What is commercial paper, and how is it used by corporations?

A

Commercial paper is an unsecured, short-term debt instrument issued by corporations to finance short-term liabilities like payroll, accounts payable, and inventories. It is typically issued at a discount from face value and reflects prevailing market interest rates.

42
Q

What is a repurchase agreement (repo), and how is it utilized in government securities trading?

A

A repo is a short-term borrowing arrangement used by dealers in government securities. In a repo, a dealer sells government assets to investors, usually overnight, and repurchases the securities the next day at a slightly higher price. Repos are a means to raise quick money.

43
Q

What is the interbank market, and how do financial institutions use it for trading currencies and derivatives?

A

The interbank market is a global network used by financial institutions to trade currencies and currency derivatives directly between themselves. Transactions in the interbank market typically last from a few hours to overnight or up to one month.

44
Q

How does the Central Bank of Egypt manage the overnight interbank rate and interest rate corridor?

A

The Central Bank of Egypt introduced overnight lending and deposit facilities, along with an interest rate corridor. The corridor’s ceiling and floor are determined by the overnight lending and deposit interest rates, respectively. The central bank sets rates for standing facilities to establish the range within which the overnight rate can fluctuate, aiming to keep it within that range.

45
Q

What is a stock, and where are stocks primarily bought and sold in Egypt?

A

A stock, also known as equity, represents ownership in a company. It is bought and sold primarily on stock exchanges, such as The Egyptian Exchange (EGX).

46
Q

What are mortgages, and how are they used in real estate transactions?

A

Mortgages are a type of borrowing used to purchase or hold real estate. Borrowers make regular payments to the lender, typically in the form of installments that include both principal and interest.

47
Q

What are mortgage-backed securities (MBS), and how are they structured?

A

MBS are bond-like financial instruments created by pooling a collection of mortgages and other real estate debt. These securities are issued based on the underlying mortgages and are often purchased from banks that originated the loans.

48
Q

What is a corporate bond, and what does it represent for investors?

A

A corporate bond is a financial asset issued by a company to raise funds. Investors who purchase corporate bonds receive predetermined interest payments at a fixed or variable rate in exchange for lending money to the company.

49
Q

What are government securities, and why are they considered low-risk investments?

A

Government securities are debt securities issued by a government to fund its obligations. These securities, such as government bonds, offer periodic interest payments known as coupon payments. They are seen as low-risk investments due to the backing of the issuing government.

50
Q

What are government agency securities, and who issues them in the United States?

A

Government agency securities are low-risk financial obligations issued by government-sponsored enterprises (GSEs) or other federally connected organizations in the United States.

51
Q

What are municipal bonds, and who issues them?

A

Municipal bonds are debt securities issued by city, county, and state governments to finance capital expenses like infrastructure projects. Bondholders act as creditors, and the bonds are used to cover expenses such as building roads, bridges, or schools.

52
Q

What are consumer loans, and what are some examples of consumer loan types?

A

Consumer loans are loans provided to customers for specific purchases. Examples include mortgages for home purchases, credit cards for regular expenses, car loans for purchasing vehicles, and student loans for education expenses.

53
Q

What is a commercial loan, and who typically provides them to businesses?

A

A commercial loan is a form of financing provided to businesses to support their operations. Commercial loans can be obtained from commercial banks, credit unions, equipment finance companies, or private non-bank lenders.

54
Q

What is the average interest rate on corporate loans in Egypt, according to the Central Bank?

A

The average interest rate on corporate loans in Egypt is 14.4% per year, according to the Central Bank of Egypt.

Money And Banks (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions