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BUS 149 > Lecture 3 > Flashcards

Lecture 3 Flashcards

1
Q

Financial intermediation

A

where savings are accumulated in depository institutions then lent or invested

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2
Q

What does a depository institution do

A

accept deposits from individuals then lend pooled deposits to businesses, governments and individuals

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3
Q

2 institutions in a depository institution

A
  1. commercial bank
  2. thrift institution
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4
Q

Commercial bank

A

accept deposits, issue check writing accounts and make loans

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5
Q

Thrift institution

A

non commercial bak depository institution that accumulate savings and primarily make consumer and mortgage loans

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6
Q

3 types of thrift institution

A
  1. savings bank
  2. savings and loan associations
  3. credit unions
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7
Q

Savings bank

A

accept savings of individuals and lend pooled savings mainly in the form of mortgage loans

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8
Q

Savings and loan associations

A

accept individual savings and lends to individuals and businesses mainly in the form of mortgage loans

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9
Q

Credit unions

A

coop notforprofit organisations that exist to provide members with consumer credit

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10
Q

2 types of contractual savings organisations

A
  1. insurance companies
  2. pension funds
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11
Q

What do contractual savings organisations do

A

collect premiums and contributions to protect against risk and provide for retirement

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12
Q

Insurance companies

A

provide financial protection against uncertainties by collecting premiums

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13
Q

Pension funds

A

receive contributions from employees / employers and invest proceeds

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14
Q

What do securities firms do

A

accept and invest individual savings and facilitate the transfer of existing securities

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15
Q

4 types of securities firms

A
  1. investment companies
  2. mutual funds
  3. investment banking firms
  4. brokerage firms
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16
Q

Investment companies

A

sell shares in their firms to individuals, invest process in corporate / government securities

17
Q

Mutual funds

A

OEIC, issue unlimited number of shared and use pooled proceeds to purchase corporate / government securities

18
Q

Investment banking firms

A

sell or market new securities issued by businesses to individuals

19
Q

Brokerage firms

A

assist individuals in purchasing new or existing securities or to sell previously purchased securities

20
Q

What do finance firms do

A

provide loans directly to consumers and businesses or aid in obtaining finance

21
Q

2 types of finance firms

A
  1. finance companies
  2. mortgage banking firms
22
Q

Finance companies

A

provide loans directly to consumers / businesses or aid in obtaining finance of durable goods / homes

23
Q

Mortgage banking firms

A

originate mortgage loans on homes and property by bringing together borrowers and investors

24
Q

Universal bank

A

engages in both commercial and investment banking activities

BUS 149 (5 decks)

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