Understanding Money and Banking -- terms

business essentials -- part 14 -- terms

money -- any object that is portable, divisible, durable, stable and serves as a medium of exchange, a store of value, and a unit of account
M-1 -- measure of the money supply that includes only the most liquid (spendable) forms of money
currency -- government issued paper money and metal cloins
check -- demand deposit order instructing a bank to pay a given sum to a specified payee
M-2 -- measure of all the money supply that includes all the components of M-1 plus the forms of money that can be easily converted into spendable form
time deposit -- bank funds that cannot be withdrawn without notice or transferred by check
money market mutual fund -- fund of short-term, low risk financial securities purchased with the assets of investor owners pooled by a nonbank institution
commercial bank -- federal or state-chartered financial institution excepting deposits that it uses to make loans and earn profits
prime rate -- interest rate available to a bank's most creditworthy customers
savings and loan association (S&L) -- financial institution excepting deposits and making loans primarily for home mortgages
mutual savings bank -- financial institution whose depositors are owners sharing in its profits
credit union -- financial institution that accept deposits from, and makes lloans to, only its members, usually employees of a particular organization
pension fund -- nondeposit pool of funds managed to provide retirement income for its members
insurance company -- nondeposit institution that invests the funds collected as premiums charged for insurance coverage
finance company -- nondeposit institution that specializes in making loans to businesses and consumers
security and investment dealer (broker) -- nondeposit institution that buys and sells stocks and bonds both for investors and for its own accounts
individual retirement account (IRA) -- tax-deferred pension fund with with wage earners supplement their retirement funds
trust services -- bank management of an individual's investments, payments, or estate
letter of credit -- bank promise, issued for a buyer, to pay a designated firm a certain amount of money is specified conditions are met
bankers acceptance -- bank promise, issued for a buyer, to pay a designated firm a specified amount at a future date
automated teller machine (ATM) -- electronic machine that allows customers to conduct account related activities 24 hours a day, seven days a week
electronic funds transfer (EFT) -- communication of fund transfer information over wire, cable, or microwave
Federal Deposit Insurance Corporation (FDIC) -- federal agency that guarantees the safety of all deposits up to $100,000 in the financial institutions that insures
Federal Reserve System (the Fed) -- Central Bank of the United States, which acts as the government bank, serves member commercial banks, and controls the nation's money supply
float -- total amount of checks written but not yet cleared through the Federal Reserve
monetary policy -- policies by which the Federal Reserve manages the nation's money supply and interest rates
reserve requirement -- percentage of its deposits that a bank must hold in cash or on deposit with the Federal Reserve
discount rate -- interest rate at which member banks can borrow money from the Federal Reserve
open market operations -- the Federal Reserves sales and purchases of securities in the open market
selective credit controls -- Federal Reserve authority to set both margin requirements for consumer stock purchases and credit rules for other consumer purchases
debit card -- plastic card that allows an individual to transfer money between accounts
point-of-sale (POS) terminal -- electronic device that allows customers to pay for retail purchases with debit cards
smart card -- credit card size plastic card with an embedded computer chip that can be programmed with electronic money
e-cash -- electronic money that moves between consumers and businesses via digital electronic transmissions
World Bank -- United Nations agency that provides a limited scope of financial services, such as funding national improvements and undeveloped countries
International Monetary Fund (IMF) -- United Nations agency consisting of a about 150 nations that have combined resources to promote stable exchange rates, provide temporary short-term loans, and serve other purposes