Banking and investments

brokerage firms

A brokerage firm, or simply brokerage, is a financial institution that facilitates the buying and selling of financial securities between a buyer and a seller. Firms usually serve to investors who trade public stocks and other securities, which is usually through the firm's agent stockbrokers.

Mutual fund company

A company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio. Investors buy shares in mutual funds

Commercial Bank

A Commercial bank is a privately owned financial institution which 1, accepts time and demand deposits, 2, makes loans to people and other organizations and 3, provides services such as documentary collections, international banking and trade financing. Since a large proportion of a commercial bank's deposits is payable on demand, it prefers to make short-term loans instead of long-term ones.

Truth in Lending Act

A federal law enacted in 1968 with the intention of protecting consumers in their dealings with lenders and creditors. The Truth in Lending Act was invoked by the Federal Reserve through a series of regulations. TILA applies to most credits, whether its closed-end credit like a mortgage, or open-end credit like a credit card. the act regulated what companies can advertise and say about the benefits of their loans or services.

Savings bank

A financial institution whose primary function is to hold deposit in savings accounts. also known as the S&L

Roth IRA

A tax-qualified savings account for individuals that allows the account holder to set aside money for retirement.

ATM

An electronic banking outlet, which allows customers to complete basic transactions without the aid of a branch representative or teller. There are two primary types of automated teller machines, or ATMs. The basic units allow the customer to only withdraw cash and receive a report of the account's balance.

Mutual funds

An investment vehicle managed by finance professionals that raises capital by selling shares (called units) in a chosen and balanced set of securities to the public.

automatic withdrawal

Arrangement under which an investor receives periodic cash payments withdrawn from his or dividend or capital gains income.

overdraft

Balance of a bank account in which funds withdrawn have exceeded funds deposited.

Debit card

Bank card used in cash transactions, but which is not a credit card. In a debit card transaction, the amount of a purchase is withdrawn from the available balance in the cardholder's account. If the available funds are insufficient, the transaction is not completed.

Savings account

Bank or other depository institution account 1, from which withdrawals can be made, 2, interest accrues on the account balance, 3, does not have any maturity date, and 4, usually does not require a minimum balance.

how are interest rates established

Different types of interest rates are driven by different forces. Variable interest rates vary throughout the life of the loan. Until the housing boom in the early 2000s, they varied along with the Federal funds rate. That is the target interest rate directly controlled by the Federal Reserve.

electronic payments

E payment is a subset of an e-commerce transaction to include electronic payment for buying and selling goods or services offered through the Internet. Generally we think of electronic payments as referring to online transactions on the internet, there are actually many forms of electronic payments.

Credit union

Financial cooperative created for and by its members who are depositors, borrowers, and the shareholders. Credit unions are operated for a non-profit basis. Credit unions offer many banking services such as consumer and commercial loans, time deposits, credit cards, and guaranties. Credit unions are normally taxed at rates lower than those applied to commercial banks and other financial institutions. their members often have a common-bond, such as employment in the same fir, of domicile in the same community. They are a type of mutual association.

money market

Network of banks, discount houses, institutional investors, and money dealers who borrow and lend among themselves for the short-term (typically 90 days).

Certificate of deposit CD

Receipt issued by a depository institution (such as a bank, credit union, or a finance or insurance company) to a depositor who opens a certificate account or time deposit account. Issued in a negotiable or non-negotiable form, it states the 1, amount deposited, 2, rate of interest, and 3, minimum period for which the deposit should be maintained without incurring early withdrawal penalties.

how they affect investment

Simple and compound interest allow your money to work for you by earning additional income. Although both types of interest earn you money, compound interest potentially earns you more. However, if you borrowed money for an investment, the interest on the loan works against you in the same way.

Credit card

Standard-size plastic token, with a magnetic stripe that holds a machine readable code. Credit cards are a convenient substitute for cash or check, and an essential component of electronic commerce and internet commerce.

Savings bonds

Tax-free government bonds sold usually at a discount on their par -value, and considered risk free investment.

Federal Deposit insurance coorporation

The Federal Deposit Insurance Corporation (FDIC) preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for up to $250,000 per depositor, per insured bank, for each ownership category by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails.

how to prevent inflation

The contractionary policy is said to be able to help with inflation by reducing money supply within an economy by decreasing bond prices and increasing interest rates. This helps reduce spending because when there is less money to go around, those who have money want to keep it and save it, instead of spending it. It also means less available credit, which also reduces spending. Reducing spending is important during inflation because it helps halt economic growth and, in turn, the rate of inflation.

what are some causes of inflation

The theory of demand-pull inflation can be summarized as "too much money chasing too few goods". In other words, if demand is growing faster than supply, prices will increase. This usually occurs in growing economies. Also, Cost-Push Inflation, which is when companies' costs go up, they need to increase prices to maintain their profit margins. Increased costs can include things such as wages, taxes, or increased costs of imports.

Savings and Loans Associations (S&L)

US depository institution, which is typically chartered and organized like a bank, that offers home mortgage loans and basic banking services such as checking accounts and credit cards. It is also called a savings and loan bank.

Checking account

a bank account which pays little or no interest, but from which the customer can withdraw money when he or she wants by writing checks.

What is inflation

a general increase in prices and fall in the purchasing value of money.

what are interest rates

interest rates are the annualized cost of credit or debt-capital computed as the percentage ratio of interest to the principal.

direct deposit

the electronic transfer of a payment directly from the account of the payer to the recipient's account.