Different Types of Financial Institutions

Question 1

Banks And Credit Unions

Answer 1

1) Deposits (savings)

2) Lons to people and businesses

Question 2

Insurance Companies

Answer 2

1) Premiums and investment earnings

2) Invests mostly in bonds and some stocks, using the investment income to pay claims

Question 3

Mutual Funds

Answer 3

1) People’s investments (savings)

2) Buys stocks, bonds, and other financial instruments on behalf of its investors

Question 4

Pension Funds

Answer 4

1) Retirement savings contributed through the workplace

2) Similar to mutual funds, excepts with the purpose of providing retirement income

Question 5

Hedge Funds

Answer 5

1) Investments by wealthy individuals and endowments

2) Invests in any kind of investment in an attempt to maximize returns

Question 6

Venture Capital Funds

Answer 6

1) Investments by wealthy individuals and endowments

2) Invests in start up, entrepreneurial firms

Question 7

Private Equity Funds

Answer 7

1) Investments by wealthy individuals and endowments

2) Purchases whole companies by using a small amount of equity and borrowing the rest