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Encyclopedia > Financial institution
Finance

The field of finance refers to the concepts of time, money and risk and how they are interelated. ... Image File history File linksMetadata Size of this preview: 800 × 600 pixelsFull resolution (2592 × 1944 pixel, file size: 1. ...


Financial Markets

Bond market
Stock (Equities) Market
Forex market
Derivatives market
Commodity market
Money market
Spot (cash) Market
OTC market
Real Estate market This article does not cite any references or sources. ... The bond market, also known as the debit, credit, or fixed income market, is a financial market where participants buy and sell debt securities usually in the form of bonds. ... A stock market or (equity market) is a private or public market for the trading of company stock and derivatives of company stock at an agreed price; both of these are securities listed on a stock exchange as well as those only traded privately. ... In finance, the exchange rate between two currencies specifies how much one currency is worth in terms of the other. ... The derivatives markets are the financial markets for derivatives. ... Chicago Board of Trade Futures market Commodity markets are markets where raw or primary products are exchanged. ... This article is about short-term financing. ... Template:The Spot Market The Spot Market or Cash Marketis a commodities or securities market in which goods are sold for cash and delivered immediately. ... Over-the-counter (OTC) trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. ... Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ...


Market Participants

Investors
Speculators
Institutional Investors There are two basic financial market participant catagories, Investor vs. ... Investment is a term with several closely related meanings in finance and economics. ... Speculation is the buying, holding, and selling of stocks, commodities, futures, currencies, collectibles, real estate, or any valuable thing to profit from fluctuations in its price as opposed to buying it for use or for income - dividends, rent etc. ... An institutional investor is an investor who is an institution like a bank, insurance fund, retirement fund, or mutual fund manager. ...


Corporate finance

Structured finance
Capital budgeting
Financial risk management
Mergers and Acquisitions
Accounting
Financial Statements
Auditing
Credit rating agency Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Structured finance describes any non-standard way of raising money. ... The process of determining which potential long-term projects are worth undertaking, by comparing their expected discounted cash flows with their internal rates of return. ... Financial risk management is the practice of creating economic value in a firm by using financial instruments to manage exposure to risk, particularly credit and market risk. ... Acquisition redirects here. ... It has been suggested that Accounting scholarship be merged into this article or section. ... Historical financial statement Financial statements (or financial reports) are formal records of a business financial activities. ... Basic definition Audit is the examination of records and reports of a company, in order to check that what is provided is relevant and accurate. ... A credit rating agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations. ...


Personal finance

Credit and Debt
Employment contract
Retirement
Financial planning-1... Credit as a financial term, used in such terms as credit card, refers to the granting of a loan and the creation of debt. ... For other uses, see Debt (disambiguation). ... An employment contract is an agreement entered into between an employer and an employee at the commencement of the period of employment and stating the exact nature of their business relationship, specifically what compensation the employee will receive in exchange for specific work performed. ... Retirement is the point where a person stops employment completely. ... A Financial Planner or Personal Financial Planner is a practicing professional who helps people to deal with various personal financial issues through proper planning, which includes but not limited to these major areas: tertiary education planning, retirement planning, investment planning, risk management and insurance planning, tax planning, estate planning and...


Public finance

Tax This article does not cite any references or sources. ... Taxes redirects here. ...


Banks and Banking

Fractional-reserve banking
Central Bank
List of banks
Deposits
Loan
Money supply For other uses, see Bank (disambiguation). ... Fractional-reserve banking refers to a financial system in which some fraction of the deposits can be used to finance profitable but illiquid investments. ... This article does not cite any references or sources. ... This is a list of banks throughout the world. ... Bank deposits are the large part of the money supply. They come in different types depending on withdrawal restrictions. ... For other uses, see Loan (disambiguation). ... In macroeconomics, money supply (monetary aggregates, money stock) is the quantity of currency and money in bank accounts in the hands of the non-bank public available within the economy to purchase goods, services, and securities. ...


Financial regulation

Finance designations
Accounting scandals Financial supervision is government supervision of financial institutions by regulators. ... There are a variety of Finance designations or Accreditations that can be earned, and awarded to those in the finance industry. ... Accounting scandals, or corporate accounting scandals are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. ...


History of finance

Stock market bubble
Recession
Stock market crash A stock market bubble is a type of economic bubble taking place in stock markets when price of stocks rise and become overvalued by any measure of stock valuation. ... In macroeconomics, a recession is generally associated with a decline in a countrys real gross domestic product (GDP), or negative real economic growth. ... A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market. ...


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In financial economics, a financial institution acts as an agent that provides financial services for its clients or members. Financial institutions generally fall under financial regulation from a government authority. Common types of financial institutions include banks, building societies, credit unions, stock brokerages, asset management firms, and similar businesses. Financial economics is the branch of economics concerned with resource allocation over time. ... Financial services is a term used to refer to the services provided by the finance industry. ... Financial supervision is government supervision of financial institutions by regulators. ... For other uses, see Bank (disambiguation). ... A building society is a financial institution, owned by its members, that offers banking and other financial services, especially mortgage lending. ... A credit union is a cooperative financial institution that is owned and controlled by its members. ... A Stock broker sells or buys stock on behalf of a customer. ...

Contents

Function

Financial institutions provide a service as intermediaries of the capital and debt markets. They are responsible for transferring funds from investors to companies, in need of those funds. The presence of financial institutions facilitate the flow of monies through the economy. To do so, savings are pooled to mitigate the risk broughtovide funds for loans. Such is the primary means for depository institutions to develop revenue. Should the yield curve become inverse, firms in this arena will offer additional fee-generating services including securities underwriting, and prime brokerage.


Corporate valuation

Relative metrics : Price/Equity Price/Book Value


Use Equity Multiples (as opposed to Enterprise Multiples). In order to consider how valuing a Financial Institution's balance sheet is different from a non-Financial firm. Consider how an industrials firm wields capital machinery (asset) and the loans (liabilities) it used to finance that asset. The line is blurred in Financial Institutions, which must hold deposit accounts (liabilities) to fuel the issuance of loans (assets). The same accounts are considered loans as they are held in ownership not of the bank, but of the individual client.


Dividend Discount Model : Earnings-per-share


Dividends-per-share


Discounted Cash Flow (DCF) Model : You'll need the FCFE (Free Cash Flow for Equity), which is the amount of money that is returned to shareholders. Calculate an FCFF (Free Cash Flow to the Firm): EBIT (1-tax rate) -Capital Expenditures+ (Depreciation & Amortization) - (Net increase in working capital)= FCFF


FCFF-Debt+Cash=FCFE


Use the Capital Asset Pricing Model, not the Weighted Average Cost of Capital (for the same reasons one uses Equity Multiples in relative valuation) to determine the cost of equity (the return required by shareholders in order to make the decision to invest in a financial institutions)


Excess Return Model : A model where valuation is expressed as the sum of capital invested currently in the firm and the present value of dollar excess returns that the firm expects to make in the future.[1]


Governance

Governance is a critical issue for financial institutions as they operate in a substantially regulated environment. Some of the key governing bodies are:

  • United States
    • FFIEC
    • FDIC
    • NCUA
    • State governments each often regulate and charter financial institutions
  • Norway
    • Financial Supervisory Authority of Norway

FFIEC stands for Federal Financial Institutions Examination Council ... The Federal Deposit Insurance Corporation (FDIC) was created by the Glass-Steagall Act of 1933. ... The National Credit Union Administration (NCUA) is the United States federal agency that charters and supervises federal credit unions and insures savings in federal and most state-chartered credit unions across the country through the National Credit Union Share Insurance Fund (NCUSIF), a federal fund backed by the full faith... The Financial Supervisory Authority of Norway (Norwegian: ) is a Norwegian government agency responsible for supervision of fiancial companies within Norway based on law and regulations from Storting, the Norwegian Ministry of Finance and international accounting standards. ...

See also

For other uses, see Bank (disambiguation). ... A credit union is a cooperative financial institution that is owned and controlled by its members. ... Financial economics is the branch of economics concerned with resource allocation over time. ... A savings and loan association is a financial institution which specializes in accepting savings deposits and making mortgage loans. ... The Consumer Credit Act 1974 is a consumer protection law in the UK. It requires certain businesses to obtain Consumer credit licences and protects individuals receiving credit up to £25,000. ...

  Results from FactBites:
 
FRB: Electronic Check Conversion (1501 words)
Your financial institution will not return any checks that are converted, even if you normally receive your original checks or images of those checks with your statement.
You have the right to ask your financial institution to investigate any electronic fund transfers from your account that you believe are unauthorized or incorrect.
Your check won't be returned to you with your account statement from your financial institution because the transaction was processed as an electronic fund transfer, not as a check transaction.
  More results at FactBites »

 
 

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