FBLA Banking and Financial Systems Flashcards
banking
The issuing, exchanging, loaning, and custody of money and the extension of credit.
payer
The person who writes a check.
2-for-1 stock split
When each stockholder receives an additional share for each share held, but the value of each share is reduced by half: two shares now equal the original value of one share before the split.
3-for-2 stock split
When each stockholder receives an additional share for every two shares held, but the value of each share is reduced by 2/3: three shares now equal the original value of two shares before the split.
credit card
A card issued by a financial company giving the holder an option to borrow funds, usually at point of sale. They have higher interest rates (around 19% per year) and are primarily used for short-term financing. Interest usually begins one month after a purchase is made and borrowing limits are pre-set according to the individual’s credit rating.
One of the most popular and widely accepted forms of payment for consumer goods and services in the U.S.
debit card
An electronic card issued by a bank which allows bank clients access to their account to withdraw cash or pay for goods and services. This form of payment also removes the need for checks as it immediately transfers money from the client’s account to the business account.
The major benefits to this type of card are convenience and security.
Securities Investor Protection Corporation
Insures investors accounts for up to $500,000 (including $100,00 in cash), in the event of fraud or the bankruptcy of a member securities brokerage.
add-on clause
Provision contained in an installment contract. An add-on clause creates a security interest in the earlier goods until full payment is made on the new goods. By this clause, the earlier purchases serve as the security for new purchases.
True or false? Purchasers of automobile liability insurance can reduce their premium costs by agreeing to a deductible.
false
liquid assets
Assets that are easily convertible to cash, such as those in savings accounts, stocks, and US savings bonds.
higher interest rates
A tight money policy followed by the Federal Reserve would most likely result in:
renewable term life insurance
Best for short-term life insurance. Policies that start out with low premiums, but increases each time the term is renewed. Policyholders are guaranteed renewal for succeeding terms even if they have a serious illness.
Truth in Lending Act
Lenders are required to disclose the true costs of credit to borrowers, including the total amount of interest charged over the life of a loan and the amounts of monthly payments by this federal law:
escrow
When real estate agents have the bank collect money from buyers and put it into the seller’s account, they are using the bank’s _____ services.
municipal bonds
Bonds issued by a local government, or its agencies. Most likely would have the lowest interest rate.
