[Principles of Business, Finance, and Marketing] Chapter 18 Vocabulary – Flashcards
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bank
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an institution that accepts demand deposits and makes commercial loans
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demand deposit
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money put into a financial institution by depositors and which can be withdrawn at any time without penalty
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commercial loan
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a loan made to a business
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consumer loan
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a loan made to a individual
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non-bank financial institution (non-bank)
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an institution that offers only demand deposits or commercial loans, but not both
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commercial bank
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a financial institution that provides many services, such as handling time and demand deposits and commercial and consumer loans
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check
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a written order on a financial institution to pay previously deposited money to a third party on demand
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endorsement
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the signature usually on the back - that transfers a negotiable instrument
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collateral
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property a borrower pledges to assure repayment of a loan
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unsecured loan
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a loan that is not backed by collateral
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secured loan (collateral loan)
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a loan that requires the borrower to pledge something of value as security
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prime rate
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the lowest rate of interest; the rate at which large banks loan large sums to the best-qualified borrowers
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electronic funds transfer (EFT)
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transferring money by computer rather than by check
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direct deposit
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allows a business to electronically transfer employees' paychecks directly from the employer's bank account to employee's bank accounts
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automated teller machine (ATM)
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a computer that enables bank customers to deposit, withdraw, or transfer funds by using a bank-provided plastic card
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savings account
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an account that allows customers to make deposits, earn interest, and make withdrawals at any time without financial penalties
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certificate of deposit (CD)
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a savings account that requires an investor to deposit a specified sum for a fixed period at a fixed interest rate
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money market account
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a type of savings account in which the deposits are invested in short-term, government-backed securities
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investment company
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an organism that specializes in the sale of a variety of stocks, bonds, and other securities
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mutual fund
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pools the money of many small investors for the purchase of stocks and bonds
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treasury bill (t-bill)
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short-term security sold by the federal government to finance the cost of running the government
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treasury note
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securities sold by the U.S. government in amounts of $1,000 up to $5,000 that generally matures in one to ten years
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treasury bond
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securities sold in $1,000 to $1 million amounts with the maturities ranging from 10 to 30 years
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liquidity
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refers to the ease turning an investment into cash without significant los
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stock broker (broker)
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a professional who buys and sells corporate securities for customers through a stock brokering firm that gives investment advice
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stock index
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a kind of average of the prices of selected stocks considered to be representative of a certain class of stocks or of the economy in general
