ECON 114 Lecture Notes - Lecture 8: Loanable Funds, Government Debt, Dow Jones Industrial Average
1-Principal __________________ fall into three categories: depository institutions (banks), contractual savings institutions, and investment intermediaries.
Financial markets security exchanges financial intermediariesâ investment funds
bitcoin/annuity payments securities/investment advice
2-Deposits that are payable on demand but do not allow their owner to write checks are called _______________.
Restricted deposits savings deposits time sensitive deposits non-checkable deposits demand deposits
3-Deposit with fixed terms to maturity are called ___________.
Relative deposits term deposits fixed deposits restricted deposits time deposits
4-Commercial banks ___________ primarily by issuing checking deposits, savings accounts, and time deposits.
Increase profits decrease cost attract investors raise funds increase assets
5-A type of depository institution that over time has become more like commercial banks and are now more competitive with each other are called ______________ associations and mutual savings banks.
savings and loan contractual savings institutions, investment intermediaries
crowd funding sites deposit and loan
6-Credit unions are typically very small cooperative lending institutions organized around a particular _____________________: members of the same union, employees of a particular firm, and members of the same profession, such as teachers.
Type of investment corporation financial strategy risk avoidance strategy
group that have something in common
7-Insurance companies and pension funds are examples of ________________ institutions.
contractual savings depository institutions (banks), investment intermediaries entrepreneurial at risk
8-Contractual savings institutions (CSIâs) acquire funds at _______________ on a contractual basis.
Estate sales periodic intervals bankruptcy auctions liquidations initial offerings
9-CSIâs do not worry as much as banks about losing funds quickly because they can predict with reasonable accuracy how much they will have to pay out in ___________ in coming years.
Interest payments dividends bank notes benefits IOUâs
10-_______________ is not as important a consideration for CSIâs as it is for banks.
Types of customers adverse selection Liquidity of assets portfolio diversification liabilities
11-CSI investments are typically ____________ such as corporate bonds, stocks, and mortgages.
Short-term securities long-term securities 3-month term securities overnight securities short-term assets
12-Companies that insure people against financial hazards following a death and sell annuities are called ________________________.
Predatory companies over-the-counter companies risky companies life insurance companies depository companies
13-_________________ that people pay to keep their policies in force constitute the funds life insurance companies use to buy corporate bonds and mortgages.
Interest dividends installments late fees Premiums
14-Companies that ___________ their policyholders against loss from theft, fire, and accidents are called fire and casualty insurance companies.
Insure Hold harmless guarantee advise oversee
15-Fire and casualty insurance companies acquire funds through the _________________ for their policies.
Sale of stock liquidation of collection of premiums interest payments dividends
16-Because of the greater possibility of loss of funds if major disasters occur, fire and casualty companies buy more ________________ than life insurance companies do.
Comprehensive insurance liquid assets risky assets corporate insurance bankruptcy insurance
17-Private pension funds and state and local retirement funds provide _______________ in the form of annuities to employees who are covered by a pension plan.
Dividends revenue stock options retirement income loans
18-Pension funds acquire funds from _____________ from employers and employees.
Fees pledges contributions garnishments payroll deductions
19-The largest ______________ of pension funds are corporate bonds and stocks.
Liability holdings asset holdings interest payments dividend payments fees
20-_________________________ include; finance companies, mutual funds and money market mutual funds.
depository institutions (banks), contractual savings institutions, stock markets
bond markets Investment intermediaries
21-Finance companies raise funds by ___________ commercial paper and by ____________ stocks and bonds.
Issuing/selling selling/buying selling/ issuing buying/issuing discounting/shorting
22-Finance companies lend these funds to __________, who make purchases of such items as furniture, automobiles, and home improvements, and to small businesses.
-depository institutions (banks), consumers contractual savings institutions,
investment intermediaries corporations
23-It is common for a finance company to be organized by a parent corporation to help _______________, such as; ford motor credit company.
Diversify its portfolio acquire assets liquidate liabilities sell its product off set profits
24-Selling shares to many individuals and using the proceeds to purchase diversified portfolios of stocks and bonds describes how _______________ acquire funds.
depository institutions (banks), mutual funds contractual savings institutions
stock markets bond markets
25-Shareholders can sell shares at any time but shares are subject to value fluctuations therefore mutual fund investments can be _______.
risky Subject to high returns certain investments interest rate neutral misunderstood
26-Money market funds sell _______ like mutual funds and offer checking accounts like ___________.
Deposits/insurance companies bonds/banks shares/insurance companies
Shares/ banks stock options/crowd sourcing sites
27-Money market funds invest in ________ and very ____________ and interest on these assets is paid out to the shareholders.
High risk/non-liquid junk bonds/risky assets low risk/ liquid assets low risk/junk bonds sub-prime securities/liquid assets
28-Money market funds have experienced extraordinary growth primarily because people like the idea of having a checking account that ____________________.
Has no fees pays them interest offers overdraft protection pays dividends
always has money in it
29-Investment banks help a ______________ issue securities.
Person foreign country stock market corporation bond market
30-Investment banks advises the corporation on which type of ______________ to issue; stocks or bonds.
Insurance loans interest rates dividends products securities
31-Investment banks help sell the corporations securities by purchasing them from the corporation and _______ them in the market.
Discounting re-selling insuring advertising financing
32-Investment banks also act as ___________ and earn enormous fees by helping corporations acquire other companies through mergers or acquisitions.
Depositories money launders deal makers insurance companies entrepreneurs