Financial Institutions

Question 1

Commercial banks

Answer 1

depository institutions whose major assets are loans and major liabilities are deposits. Commercial banks’ loans are broader in range, including consumer, commercial, and real estate loans, than other depository institutions.

Question 2

Thrifts

Answer 2

depository institutions in the form of savings associations, savings banks, and credit unions. Thrifts generally perform services similar to commercial banks, but they tend to concentrate their loans in one segment, such as real estate loans or consumer loans.

Question 3

Insurance Companies

Answer 3

financial institutions that protect individuals and corporations (policyholders) from adverse events. Life insurance companies provide protection in the event of untimely death, illness, and retirement. Property casualty insurance protects against personal injury and liability due to accidents, theft, fire, etc.

Question 4

Security firms and investment banks`

Answer 4

financial institutions that underwrite securities and engage in related activities such as securities brokerage, securities trading, and making a market in which securities can trade.

Question 5

Finance Companies

Answer 5

financial intermediaries that make loans to both individuals and businesses. Unlike depository institutions, finance companies do not accept deposits but instead rely on short- and long-term debt for funding.

Question 6

Investment Funds

Answer 6

financial institutions that pool financial resources of individuals and companies and invest those resources in diversified portfolios of asset.

Question 7

Pension Funds

Answer 7

financial institutions that offer savings plans through which fund participants accumulated savings during their working years before withdrawing them during their retirement years. Funds originally invested in and accumulated in pension funds are exempt from current taxation.