Application 9C - 9E pg. 45 - 47

Question 1

Define banks

Answer 1

banks - most commonly recognized financial organization offering various kinds of savings and checking accounts and other financial products to their customers

Question 2

Describe credit unions

Answer 2

> serve “members” who can join voluntarily
“member” has voting privileges in making decisions and in creating policies for organization
profits from credit unions are distributed to its members through lower interest rates on loans and higher interest rates on savings and checking accounts than banks offer

Question 3

Describe finance companies

Answer 3

> make loans directly to consumers

>buy installment contracts from merchants who sell goods on credit

Question 4

Describe insurance companies

Answer 4

> receive a premium paid by the insured to protect the family of the insured in the event of loss or death
lend out their surplus cash creating additional income for business

Question 5

Describe pension funds

Answer 5

> receive funds from a company’s employees, and the employer may contribute to the fund on behalf of his employees
funds are invested in stocks and bonds
interest and dividends earned over a 25 to 40 year period are paid at retirement to employee

Question 6

Describe insider trading

Answer 6

> occurs when someone buys or sells stocks on the stock market based on information that he has about a certain company that has not yet been made public