Finance 2 - Money and the Monetary System Flashcards
The relationship of the total finance charges associated with a loan. This must be disclosed to borrowers by lenders under the Truth in Lending Act.
annual percentage rate (APR)
Mortgage loans establishing commercial property as collateral.
commercial paper
The interest rate set by the Federal Reserve that member banks are charged when they borrow money through the Fed.
discount rate
The rate recommended by the Federal Reserve for the member banks to charge each other on short-term loans. These rates form the basis on which the banks determine the percentage rate of interest they will charge their loan customers.
federal funds rate
The Fed’s activities in buying and selling securities to control the money supply.
open-market operations
The rate of interest charged by commercial banks to first-class-risk corporate borrowers for short-term loans. The prime rate is the basis of the whole structure of commercial interest in the United States.
prime rate
A money policy whereby the U.S. Central Bank of the United States directly influences the economy by increasing the amount of cash in circulation in order to stimulate the economy. This is done by purchasing securities and lowering interest rates significantly where traditional methods employed by the Fed are ineffective.
quantitative easing (QE)
Implements the Truth in Lending Act, requiring credit institutions to inform borrowers of the true cost of obtaining credit.
Regulation Z
Percentage of deposits the Federal Reserve requires member banks to set aside as a safety measure.
reserve requirements
Something given, deposited, or pledged to make secure the fulfillment of an obligation, usually the repayment of a debt. Generically, mortgages, trust deeds, and other financing instruments backed by collateral pledges are termed securities for investment purposes.
securities
Department of the Treasury long-term securities that run more than 10 years.
Treasury bonds
Instruments for short-term borrowing by the government.
Treasury bills
Department of the Treasury intermediate-term securities that run two to 10 years.
Treasury notes
Establishes and manages a Treasury fund in an attempt to curb the ongoing financial crisis of 2007.
Troubles Asset Relief Program (TARP)
Federal government regulates the lending practices of mortgage lenders through Regulation Z of this act, which requires full disclosure of all terms of credit, including the annual percentage rate (APR)
Truth in Lending Act (TILA)
