FIN 3320 Financial Institutions

Bobby Merriman Finance 3320 Financial Institutions

financial institution

a company or organization that helps facilitate and engage in financial transactions

financial service industry

the sector of the economy that involves businesses who provide services related to money

depository institution

a company that accepts deposits and provides loans

financial service company

a company that provides a range of activities to manage money and the activities related to money

regulatory body

a government sponsored or related organization established to oversee and enforce laws and regulations within the financial system

commercial bank

a financial institution that accepts deposits, makes loans, and offers savings, checking, and other financial accounts to businesses

deposit

placing money into an account for safe keeping; grows by a promised interest rate

loan

money borrowed with the agreement to repay the principal (the amount borrowed) with interest over a specified time period

investment bank

a financial institution that acts as an intermediary in large, complex financial transactions; the most common being (1) as an underwriter between companies and investors in initial public offerings (IPOs) for debt or equity or (2) as an advisor between two companies in mergers and acquisitions (M&A)

underwriting fees

the money an investment bank receives when helping companies issue new securities, such as stocks or bonds

advisory fees

the money an investment bank receives when advising a company during a merger, acquisition, or other corporate transaction

exchange company

a financial institution that provides a platform to trade securities, allowing companies to issue securities to investors (primary market) and investors to trade securities between one another (secondary market)

securities broker

a financial institution that buys or sells securities as instructed by their client in financial markets; they take orders from investors and execute trades on their behalf

securities dealer

a financial institution that buys or sells securities for their own account (as opposed to a broker who buys and sells securities for clients)

liquidity

the ease and speed which a security can be converted into cash without affecting the price

clearinghouse

an intermediary that facilitates the settlement of transactions between buyers and sellers of financial instruments in financial markets

counterparty risk

the risk that the other party in a financial transaction will not fulfill their obligations as agreed

asset management company

a financial institution that collects money (or funds) from multiple clients and invests their money into a variety of securities on their behalf

mutual fund

collects money from multiple investors to invest in a diversified portfolio of securities

exchange traded fund (ETF)

a diversified portfolio that trades on an exchange, just like an individual security

hedge fund

collects money from multiple investors to invest in a portfolio that employs various unorthodox strategies

wealth management company

a financial institution that provides personalized advice based on individual needs

insurance company

a business that sells protection against risks; you pay them money, called a premium, and in return, they promise to help pay for costs if an unlikely but bad event occurs

credit rating agency

a company that assesses the creditworthiness of financial instruments or borrowers, particularly companies or governments that issue debt securities

credit rating

a score intended to reflect the likelihood that the entity will be able to repay its debt

credit card company

financial institutions that provide consumers and businesses with access to revolving credit by facilitating efficient and safe transactions through electronic payments