Chapter 15 Flashcards
money
object that is portable, divisible, durable, and stable, and that serves as a medium of exchange, a store of value, and a measure of worth
M-1
measure of the money supply t5hat includes on the most liquid (spendable) forms of money
currency (cash)
government-issued paper money and metal coins
check
demand deposit order instructing a bank to pay a given sum to a specified payee
checking account (demand deposit)
bank account funds, owned by the depositor, that may be withdrawn at any time by check or cash
M-2
measure of the money supply that includes all the components of M-1 plus the forms of money that can be easily converted into spendable forms
time deposit
bank funds that have a fixed term of time to maturity and cannot be withdrawn earlier or transferred by check
money market mutual fund
fund of short-term, low-risk financial securities purchased with the pooled assets of investor-owners
commercial bank
company that accepts deposits that it uses to make loans, earn profits, pay interest to depositors, and pay dividends to owners
savings and loan association (S&L)
financial institution accepting deposits and making loans primarily for home mortgages
mutual savings bank
financial institutions whose depositors are owners sharing in its profits
credit union
nonprofit, cooperative financial institution owned and run by its members, usually employees of a particular organization
pension fund
nondeposit pool of funds managed to provide retirement income for its members
insurance company
nondeposit institution that invests funds collected as premiums charged for insurance coverage
securities investment dealer (broker)
financial institution that buys and sells stocks and bonds both for investors and for its own accounts
prime rate
interest rate available to a bank’s most creditworthy customers
individual retirement account (IRA)
tax-deferred pension fund that wage earners set up to supplement retirement loans
trust services
management by a bank of an estate, investments, or other assets on behalf of an individual
letter of credit
bank promise, issued for a buyer, to pay a designated firm a certain amount of money if specified conditions are met
banker’s acceptance
bank promise, issued for a buyer, to pay a designated firm a specified amount at a future date
electronic funds transfer (EFT)
communication of fund-transfer information over wire, cable, or microwave
automated teller machine (ATM)
electronic machine that allows bank customers to conduct account-related activities 24 hours a day, 7 days a week
federal deposit insurance corporation (FDIC)
federal agency that guarantees the safety of deposits up to $100,000 in the financial institutions that it insures
federal reserve system (The FED)
central bank of the US, which acts as the government’s bank, serves member commercial banks, and controls the nation’s money supply
monetary policy
management of the nation’s economic growth by managing the money supply and interest rates
reserve requirement
percentage of its deposits that a bank must hold in cash or on deposit with the Fed
discount rate
interest rate at which member banks can borrow money from the Fed
federal funds rate (key rate)
interest rate at which commercial banks lend reserves to each other, usually overnight
open-market operations
the Fed’s sale and purchase of securities in the open market
debit card
plastic card that allows an individual to transfer money between accounts
point-of-sale (POS) terminal
electronic device that tr4ansfers funds from the customer’s bank account to pay for retail purchases
smart card
credit-card-sized plastic card with an embedded computer chip that can be programmed with electronic money
world bank
UN agency that provides a limited scope of financial services, such as funding improvements in underdeveloped countries
international monetary fund (IMF)
UN agency consisting of about 150 nations that have combined resources to promote stable exchange rates, provide temporary short-term loans, and serve other purposes
