Bank An institution that accepts deposits, makes loans, pays checks, and provides financial services. A primary role of banks is connecting those with funds, such as investors and depositors, to those seeking funds, such as individuals or businesses needing loans.
Brokerage A business that specializes in trading stocks. Brokerages act as intermediaries between those wanting to buy stocks and those wanting to sell stocks.
Central bank A type of bank that acts as the central monetary authority of a country. Typical functions of central banks include issuing currency for the country, making decisions regarding official interest rates, regulating and supervising the banking industry, and acting as banker to the government.
Credit union A non-profit financial cooperative made up of members with a common bond, such as place of employment or residence. Members purchase shares in the credit union and receive payments from the credit union in the form of dividends.
Deregulation Allowing competitors in an industry to be controlled by market forces as opposed to government regulation. Deregulation of the banking industry allowed financial institutions to offer a wider range of services, giving banks the opportunity to compete more effectively with other financial companies.
Hedge fund A private investment fund open to a limited number of investors. Hedge funds generally require substantial investments that can range from $250,000 to $10 million. High-risk investment strategies are often used, such as hedging, leveraging, and derivatives.
Investment bank A financial institution that provides investment-related services, such as advisory services for mergers and acquisitions, corporate finance, and debt and equity underwriting services.
Liabilities The funds owed by a bank, including deposits and money borrowed from central banks or other banks.
Mortgage loan A loan used to purchase real-estate or finance the acquisition of assets, such as equipment or machinery. The property purchased with the mortgage loan acts as collateral that the bank can take if payment is not made.
Mortgage-backed securities Investment-grade securities that are backed by a pool of individual mortgages.
Savings and loan association A financial institution specializing in accepting savings deposits and making residential mortgage loans.
Underwriter An intermediary between an issuer of securities and investors. Underwriters purchase newly-issued securities and distribute them to investors for profit.
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