FIN 341 EXAM 1 STUDY GUIDE
Surplus Spending Units aka SSU - Answers -suppliers
Deficit Spending Units aka DSU - Answers -users
Economic Units - Answers -households, businesses, and governments
financial intermediaries - Answers -financial institutions through which savers can
indirectly provide funds to borrowers
financial intermediation - Answers -primary route for moving funds from lenders to
borrowers
5 basic functions of financial intermediaries - Answers -1. denomination divisibility
2. currency transformation
3. maturity flexibility
4. credit risk diversification
5. liquidity
4 major types of financial intermediaries - Answers -1. Depository institutions
2. contractual savings institutions
3. investment funds
4, other institutions
Depository Institutions - Answers -- commercial banks
- thrift institutions
- credit unions
contractial savings insttutions - Answers --life insurance companies
- casualty insurance companies
-pension funds
-
investment funds - Answers --mutual funds
- money market mutual funds (MMMFs)
other institutions - Answers --Finance companies
- federal agencies
money markets - Answers -wholesale markets for short term debt instruments
resembling money itself
- short maturity (less than 90 days)
- high liquidity
, -low risk
-dealer/OTC
TYPES:
Treasury bills
Negotiable certificates of deposit
Commercial paper
Federal funds
capital markets - Answers -where "capital goods" are permanently financed through
long-term financial instruments
-long maturity (5-30 yrs)
-less liquidity
- higher risk
- traded wholesale and retail on organized exchanges
TYPES:
Common stock
Corporate bonds
Municipal bonds
mortgages
Federal Reserve Act - Answers -a 1913 law that set up a system of federal banks and
gave government the power to control the money supply
FEDs goals - Answers --provide an elastic currency
- serve as lender of last resort to keep banks liquid
- improve payments system
supervise banks more vigorously
3 tools of monetary policy - Answers --reserve requirement ratio, -discount rate,
-open market opperations
4 main elements of the FED - Answers -1. !2 FRB
2. Several thousand member commercial banks
3. board of governors
4. The federal open Market Committee (FOMC)
12 Federal Reserve Banks - Answers -Bank for Banks
Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis,
Minneapolis, Kansas City, Dallas, and San Francisco
Surplus Spending Units aka SSU - Answers -suppliers
Deficit Spending Units aka DSU - Answers -users
Economic Units - Answers -households, businesses, and governments
financial intermediaries - Answers -financial institutions through which savers can
indirectly provide funds to borrowers
financial intermediation - Answers -primary route for moving funds from lenders to
borrowers
5 basic functions of financial intermediaries - Answers -1. denomination divisibility
2. currency transformation
3. maturity flexibility
4. credit risk diversification
5. liquidity
4 major types of financial intermediaries - Answers -1. Depository institutions
2. contractual savings institutions
3. investment funds
4, other institutions
Depository Institutions - Answers -- commercial banks
- thrift institutions
- credit unions
contractial savings insttutions - Answers --life insurance companies
- casualty insurance companies
-pension funds
-
investment funds - Answers --mutual funds
- money market mutual funds (MMMFs)
other institutions - Answers --Finance companies
- federal agencies
money markets - Answers -wholesale markets for short term debt instruments
resembling money itself
- short maturity (less than 90 days)
- high liquidity
, -low risk
-dealer/OTC
TYPES:
Treasury bills
Negotiable certificates of deposit
Commercial paper
Federal funds
capital markets - Answers -where "capital goods" are permanently financed through
long-term financial instruments
-long maturity (5-30 yrs)
-less liquidity
- higher risk
- traded wholesale and retail on organized exchanges
TYPES:
Common stock
Corporate bonds
Municipal bonds
mortgages
Federal Reserve Act - Answers -a 1913 law that set up a system of federal banks and
gave government the power to control the money supply
FEDs goals - Answers --provide an elastic currency
- serve as lender of last resort to keep banks liquid
- improve payments system
supervise banks more vigorously
3 tools of monetary policy - Answers --reserve requirement ratio, -discount rate,
-open market opperations
4 main elements of the FED - Answers -1. !2 FRB
2. Several thousand member commercial banks
3. board of governors
4. The federal open Market Committee (FOMC)
12 Federal Reserve Banks - Answers -Bank for Banks
Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis,
Minneapolis, Kansas City, Dallas, and San Francisco
