Chapter 3 CENGAGE HW (definitions)

Question 1

This institution operates as an investment company that accepts money from savers and pools these funds to buy a variety of financial assets (for example, stocks and bonds).

Answer 1

Mutual fund

Question 2

This intermediary generally accepts contributions from both employers and employees, and its funds are usually shielded from taxes until the funds are withdrawn.

Answer 2

Pension fund

Question 3

This institution was originally created to collect the small deposits of individual savers and to make long-term home loans back to these customers.

Answer 3

Thrift institution

Question 4

This institution is organized as a not-for-profit business enterprise that exhibits a mutual ownership structure.

Answer 4

Credit union

Question 5

The contracts provided by this institution may provide financial protection and savings benefits combined, or simply financial protection alone.

Answer 5

Insurance company

Question 6

This institution has historically served as the principal vehicle through which the money supply of the United States is expanded or contracted. This practice continues today.

Answer 6

Commercial bank

Question 7

Direct Transfer

Answer 7

occurs when capital flows directly from savers to borrowers and no middleman is involved

Question 8

There are three mechanisms used to move funds and securities between savers and borrowers. The simplest of these involves _____ to transfer funds and securities between the market participants.

Answer 8

a direct transfer

The simplest mechanism or market arrangement in which money is transferred from a saver with a surplus of funds to a borrower with a shortage of funds