Business Principals Chapter 7 (1)

Federal Deposit Insurance Corporation (FDIC)

plays a vital role in preserving confidence in the financial system.

FDIC stands for?

Federal Deposit Insurance Corporation

FDIC supervises _____

banks

FDIC provides _____

insurance for deposits in banks

FDIC guarantees _____

the safety of all deposits up to $250,000 for each account owner.

FDIC has the authority ______

to examine the activities and accounts of all member banks.

Commercial Banks/Institutions

Accept deposits and issue loans. Have investment arms that invest in markets and pay dividends to investors.

Savings and Loan Associations (S&Ls)

Accept deposits and make loans, primarily for home mortgages. Owned by investors.

Mutual Savings Banks

All depositors are owners; profits are shared proportionately among depositors via dividends. Operate as a co-operative.

Credit Unions

Nonprofit, cooperative financial institutions owned and run by members. Promote thrift and accept deposits only from eligible members, often linked to specific employers.

Brokerage and Securities Brokers

Act as agents for investors buying and selling financial securities.

Investment Banks

Specialize in helping firms raise capital by utilizing securities in primary markets.

Federal Reserve Act of 1913

Established the Federal Reserve System as the central bank of the U.S.

Banking Act of 1933

Established the FDIC to insure bank deposits and prohibited commercial banks from selling insurance.

FICO stands for?

Fair Isaac Company

FICO is a _____

which calculates credit scores.

CD stands for?

Certificate of Deposit

CD is a _____

savings product with a fixed interest rate.

What is a 401(k)?

A pension fund that is transportable from employer to employer. Often includes an employer match (percentage based).

What does 401(k) allow?

pre-tax investing.

Individual Retirement Accounts (IRAs)

Tax-deferred pension funds that supplement other retirement funds.

Different types of IRAs

Traditional and Roth.

Mutual Funds

Financial securities purchased with assets pooled from investor-owners, invested in a variety of stocks and bonds.

Suze Orman

A famous financial expert who teaches people how to manage money, save, and invest wisely.

The most significant factor impacting one's FICO score is _____

payment history

401(k) Misconception

You can’t set up a 401(k) by yourself without an employer—this is false.