Chapter 11: Different Types of Financial Institutions

Question 1

exists to provide a wide variety of deposit, lending, and investment products to individuals, businesses, or both.

Answer 1

financial institution

Question 2

focus on providing services and accounts for the general public, others are more likely to serve only certain consumers with more specialized offerings.

Answer 2

financial institution

Question 3

help regulate the economy, ensure fair financial practices, and facilitate prosperity.

Answer 3

financial institution

Question 4

The major categories of financial institutions are

Answer 4

1. central banks
2. retail and commercial banks
3. mortgage companies
4. credit unions
5. savings and loan (S&L) associations
6. investment banks and companies
7. brokerage firms
8. insurance companies

Question 5

are the financial institutions responsible for overseeing and managing all other banks.

Answer 5

Central banks

Question 6

In the United States, the central bank is the __________.

Answer 6

Federal Reserve Bank (Fed)

Question 7

which is responsible for conducting monetary policy and supervising and regulating financial institutions.

Answer 7

Federal Reserve Bank (Fed)

Question 8

offered products to individual consumers

Answer 8

retail banks

Question 9

worked directly with businesses

Answer 9

commercial banks

Question 10

include checking and savings accounts, certificates of deposit (CDs), personal and mortgage loans, credit cards, and business banking accounts.

Answer 10

retail and commercial banks

Question 11

is a type of nonprofit financial institution providing traditional banking services and is created, owned, and operated by its members.

Answer 11

credit union

Question 12

are not publicly traded and only need to make enough money to continue daily operations, so they often can afford to provide reduced fees and better interest rates than banks.

Answer 12

credit union

Question 13

provide individual consumers with checking accounts, personal loans, and home mortgages.

Answer 13

Savings and loan associations

Question 14

are financial institutions that provide services and act as an intermediary in complex transactions

Answer 14

Investment banks

Question 15

help individuals, businesses, and governments raise capital through the issuance of securities.

Answer 15

Investment banks

Question 16

They can also act as a broker or financial advisor for large institutional clients such as pension funds.

Answer 16

Investment banks

Question 17

assist individuals and institutions in buying and selling securities among available investors.

Answer 17

Brokerage firms

Question 18

Customers of _______________ can place trades of stocks, bonds, mutual funds, exchange-traded funds (ETFs), and some alternative investments.

Answer 18

brokerage firms

Question 19

Financial institutions that help individuals transfer the risk of loss are known as ______________

Answer 19

insurance companies.

Question 20

Financial institutions that specialize in originating or funding mortgage loans are ___________.

Answer 20

mortgage companies

Question 21

serve the individual consumer market, some specialize in lending options for commercial real estate only.

Answer 21

mortgage companies

Question 22

is an entity that acts as the middleman between two parties, generally banks or funds, in a financial transaction. A___________ may lower the cost of doing business.

Answer 22

financial intermediary

Question 23

True or False

Banks make money by charging a variety of fees and by earning interest from loans such as mortgages, auto loans, business loans, and personal loans

Answer 23

True

Question 24

True or False

The bank dont pay depositors interest for using money to make those loans.

Answer 24

False

The bank pays depositors interest for using money to make those loans.

Question 25

True or False

The bank’s profit comes from difference between what the bank earns on fees and interest and what it pays depositors.

Answer 25

True

Question 26

Banks and credit unions are generally safe places to keep your money, because they are insured by the federal government via two agencies:

Answer 26

1. the Federal Deposit Insurance Corp. (FDIC)
2. the National Credit Union Administration (NCUA).

Question 27

The Securities and Exchange Commission (SEC) typically views cryptocurrency as a ________

Answer 27

security

Question 28

the Commodity Futures Trading Commission (CFTC) calls Bitcoin a __________, and the Treasury calls it a ____________.

Answer 28

commodity; currency

Question 29

Financial institutions that help individuals transfer the risk of loss are known as

Answer 29

Insurance Companies

Question 30

True or False

Many mortgage companies today operate online or have limited branch locations, which allows for higher mortgage costs and fees.

Answer 30

False

Many mortgage companies today operate online or have limited branch locations, which allows for lower mortgage costs and fees.