Lesson 1 Flashcards
are the FINANCIAL INSTITUTIONS THAT ACT AS A BRIDGE between investors or savers (surplus units or SUs) and borrowers or security issuers (deficit units of DUs).
Financial Intermediaries
are the FINANCIAL INSTITUTIONS THAT ACT AS A BRIDGE between investors or savers (surplus units or SUs) and borrowers or security issuers (deficit units of DUs).
Financial Intermediaries
A BORROWER - LENDER RELATIONSHIP is the typical direct finance relationship or transaction. The claims arising from a direct finance transaction, like deposit, loan, and stock are all primary or direct securities.
DIRECT FINANCE
A BORROWER - LENDER RELATIONSHIP is the typical direct finance relationship or transaction. The claims arising from a direct finance transaction, like deposit, loan, and stock are all primary or direct securities.
DIRECT FINANCE
is like a RELATIONSHIP BETWEEN THE DEPOSITOR OF A BANK and the borrowers of the same bank.
INDIRECT FINANCE
was HIGHLY SPECIALIZED FINANCIAL SYSTEM where banks were set up to take deposits and grant only short-term loans.
The Old Financial Environment (OFE)
refer to financial institutions that ACCEPT DEPOSITS FROM SURPLUS UNITS
Depository Institutions
can be WITHDRAWN BY USING CHECKS.
most of it does not earn interest, although due to competition, there are now banks offering interests
Current or savings accounts
can be WITHDRAWN BY USING THE PASSBOOKS given by the bank to the depositors when they initially make their deposits
Savings accounts
refer to deposits that HAVE MATURITY, like 30 days, 60 days, 180 days, or one year.
Time deposits
are perhaps the BIGGEST of the depository institutions.
Commercial bank
perform the more simple functions of ACCEPTING DEPOSITS AND GRANTING LOANS.
Ordinary Commercial Banks
are COMBINATION of commercial banks and investment house. They offer the WIDEST VARIETY OF BANKING services among financial institutions.
Universal banks or expanded commercial banks
rating aims to determine bank’s overall condition and IDENTITY ITS STRENGTH AND WEAKNESSES financially, operationally and managerially.
The CAMELS
is COMPOSED OF SAVINGS AND MORTGAGE BANKS, stock savings and loan associations, private development banks, microfinance thrift banks, and credit unions.
Thrift banking system
are BANK SPECIALIZING IN GRANTING MORTGAGE LOANS other than the basic function of accepting deposits
Savings and mortgage banks
do not accept deposits but EXTEND LOANS.
Mortgage bank
ACCUMULATE SAVINGS OF THEIR DEPOSITORS/STOCKHOLDERS and use these accumulated savings, together with their capital for the loans that they grant and for investments in government and private securities.
Stock savings and loan association (S&L)
CATER TO THE NEEDS OF AGRICULTURE and industry providing them with reasonable rate loans for medium-and-long-term purposes.
Private development banks
are SMALL THRIFT BANKS that cater to small, micro, and cottage industries.
Micro finance thrift banks
are cooperatives ORGANIZED BY PEOPLE FROM THE SAME ORGANIZATION (whether formally or informally organized) like farmers, fishermen, teachers, sailors, employees, and so on.
Credit unions
are the MORE POPULAR TYPENOF BANKS in the rural communities
Rural and Cooperative Bank
are financial intermediaries that SELL LIFE INSURANCE POLICIES.
Life insurance companies
offer PROTECTION AGAINST pure risk.
Property/Casualty insurance companies
INSURES ONE’S HOUSE and its contents
Homeowners insurance
covers one’s spouse’s, and relatives’ home and OTHER LICENSED DRIVERS to whom the insurer gives permission to drive his car.
Auto insurance
is taken if one considers FLOOD TO BE A RISK for his business or property
Flood insurance
is a separate type of coverage that protects one’s home or business AGAINST WIND DAMAGE.
Windstorm insurance
a special type of insurance that provides COVERAGE OVER and above one’s AUTOMOBILE OR HOMEOWNER POLICY.
Umbrella liability policy
is a type of insurance that covers the cost of an insured individual’s MEDICAL AND SURGICAL EXPENSE during an illness.
Health insurance
is defined as a need for assistance with some of the ACTIVITIES OF DAILY LIVING.
Long-term care
PROTECT PROFESSIONALS, such as doctors, financial advisors, nursing home administrators, lawyers, etc., against financial losses from lawsuits filed against them by their clients or patients.
Professional liability insurance
is an OPTIONAL PURCHASED from lenders and often associated with mortgages, loans, or CREDIT CARDS.
Credit insurance
are PENSION FUND companies and MUTUAL FUND companies
Fund Managers
SELL CONTRACT TO PROVIDE INCOME to policyholders during their retirement years
Pension fund companies
are companies that ALLOW INVESTORS, including individuals, to BUY INTO MUTUAL FUNDS that buy different securities in the securities market.
Mutual fund companies
are financial intermediaries that POOL RELATIVELY SMALL AMOUNTS OF INVESTORS MONEY to finance large portfolios of investment that justify the cost of professional management
Investment companies
are PROFIT-ORIENTED FINANCIAL INSTITUTIONS that borrow and lend funds to households and businesses
Finance companies
PROVIDE INSTALMENT CREDIT TO BUYERS of big-ticket items like cars and household appliances
Sales finance companies
PROVIDE INSTALMENT CREDIT TO BUYERS of big-ticket items like cars and household appliances
Sales finance companies
GRANT SMALL LOANS TO INDIVIDUALS, generally those with low credit ratings and are unable to borrow from the regular lending institutions like banks and thrifts.
Consumer finance companies
also KNOWN AS BUSINESS FINANCE COMPANIES, grant credit to business
Commercial fiancé companies
are only COMPENSATED BY MEANS OXF COMMISSION. They act as financial intermediaries in the sense that they look for investors or savings units for the benefit of the borrowers of deficit units.
Securities brokers
BUY SECURITIES AND RESELL THEM AND MAKE PROFIT on the difference between their purchase price and their selling price.
Securities dealers
are the AGENCIES where people and some SMALL BUSINESSES “pawn” their assets as collateral in exchange of amount much smaller than the value of asset.
Pawnshops
are corporations organized for the purpose of ACCEPTING AND EXECUTING TRUSTS and acting as trustee under wills, as executor, or as guardian
Trust companies
are INDIVIDUALS OR COMPANIES WHO LOAN FUNDS TO BORROWERS, generally consumers or households
Lending investors
are INDIVIDUALS OR COMPANIES WHO LOAN FUNDS TO BORROWERS, generally consumers or households
Lending investors
