Part II Chapter 3 Flashcards
ask price
The price or yield at which a dealer will sell a
security.
bid price
The price or yield at which a dealer will purchase a
security.
brokerage firms
Institutions/firms that specialize in the sale of
securities to institutional and retail customers by
executing the distribution, or selling, side of an
investment bank’s intermediation function.
broker-dealer
A company or other organization that serves as
an intermediary in the purchase and sale of capital
market securities.
captive finance company
A subsidiary of a large industrial corporation that
finances purchases of the corporation’s products.
credit unions
Member-owned, not-for-profit financial cooperatives.
In the United States, they are chartered by either
federal or state agencies and originally were
intended to restrict membership to individuals with
a common affiliation (e.g., an employer, association,
community organization, or geographic location) but
may now include businesses as members.
Demand Deposit Account (DDA)
An account through which an account holder uses a
bank to transfer funds to, and receive deposits from,
a third party.
discount brokerage
A firm that lets investors make trades at reduced
prices, but provides little or no investment advice
distribution
An investment bank function that involves a
securities sale to investors by an investment bank or
syndicate of investment banks.
fiduciary
An individual or institution to which certain property
is given to hold in trust according to a trust
agreement.
foreign currency account
A bank account where deposit balances may be held
in a currency other than that of the country in which
the bank is located.
foreign exchange (FX)
The conversion of one country’s currency into that of
another.
foreign market
A financial market in which contracts for future
delivery of currency or commodities are bought and
sold.
industrial bank/industrial loan company
An FI with a limited scope of services. They sell
certificates that are labeled as investment shares
and can also accept customer deposits, then invest
the proceeds in installment loans for consumers and
small businesses.
insurance company
A type of nonbank financial institution that sells
insurance products.
investment bank
A financial intermediary that performs a variety of
services, such as: (1) underwriting, by acting as an
intermediary between an issuer of securities and the
investing public; (2) facilitating mergers, acquisitions,
divestitures, and other corporate reorganizations;
and (3) acting as a broker/financial advisor for
institutional clients.
loan sales
An offering of commercial banks that involves the
structuring of lending facilities so that short-term
loans can be sold to other banks and investors.
municipal securities
Types of debt (bonds or notes) issued by city,
county, or state government entities that generally
have some type of income tax exemption for any
interest paid on them.
nonbank financial institution/
intermediary
A financial services firm that does not accept
deposits from the general public but may offer
a variety of financial services including leasing,
factoring, payment services, pension funds, mutual
funds, and insurance plans
private placement
The practice of the direct sale of long-term loans to
institutional investors, such as insurance companies
and hedge funds.
universal bank
A bank that offers both commercial and investment
banking services, with investment banking services
offered through the investment banking arm of a
commercial bank’s holding company.
