1 What are brokerage firms? They are non-depository financial institutions that manage the purchase of stocks, bonds and other types of investments. The brokerage firm makes its money by charging a fee or commission for each sale or purchase.
2 What are depository and non-depository financial institutions? How do they differ? Depositories receive their money from customer deposits we think of these as banks. Non-depository receive money from other sources like mortgage companies, finance and insurance companies.
3. What are credit unions? They are nonprofit member owned financial institutions. They are able to provide loans through deposits to checking and saving accounts. You have to be a member to be able
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What are bonds? Bonds are investments that promise to pay a certain amount of interest over a period of time. They are issued by the government to raise money for specific projects. There are different series and different purchase amounts of bonds.
Critical Thinking Questions
1. What are some considerations in choosing a financial institution? Which do you think would be the most important consideration for you in choosing a financial institution? Financial experts say you should look at the products, price, place and people when deciding which to use. I think price would be most important at this time, some charge a monthly fee if you don’t have a lot of money in your account. If you’re not making a lot then anything they charge can make a difference. Most places you can do stuff on line so location doesn’t matter that much.
2 What are the pros and cons of U.S. saving bonds? Saving bonds are a safe investment you can’t lose your money like you can with stocks. The con is the interest rates are so low it takes a long time to earn money on them so it’s not a quick investment
3 What are some of the problems that people face if they use one of the “problematic” financial institutions? They tend to give small loans and charge high fees. If you don’t pay back the loan with the fees by the due date they pawn the items or keep charging higher