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Capital Markets and Financial Institutions

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Microfinance Institution

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A financial organization that provides small amounts of credit to the unemployed or low-income individuals or groups who otherwise would have no access to financial services.

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Commercial Bank

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A financial institution that provides services such as accepting deposits, providing business loans, and offering basic investment products.

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Exchange-Traded Fund (ETF)

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A marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund and trades like a stock on an exchange.

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Pension Fund

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An investment pool set aside by a corporation, government agency, or other organization to fund its employees' retirement benefits.

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Treasury Bills (T-Bills)

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Short-term government securities with maturities of one year or less, issued at a discount from the face value and do not pay interest before maturity.

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Certificate of Deposit (CD)

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A savings certificate with a fixed maturity date and specified fixed interest rate that can be issued in any denomination by banks.

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Bond Market

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A marketplace for buying and selling debt securities which governments and corporations issue to raise capital, offering investors interest income.

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Insurance Company

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A financial institution that provides risk management by compensating for losses in exchange for payment of premiums.

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Money Market

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Part of the financial market where instruments with high liquidity and very short maturities are traded, often used by participants as a means for borrowing and lending in the short term.

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Commodity Market

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A financial market that trades in primary economic sector rather than manufactured products, such as gold, oil, and grains.

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Venture Capital

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A type of private equity financing provided by firms to small, early-stage, emerging companies deemed to have high growth potential.

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Real Estate Investment Trust (REIT)

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A company that owns, operates, or finances income-generating real estate, allowing investors to buy shares in commercial real estate portfolios.

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Investment Bank

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A financial intermediary that specializes in large and complex financial transactions such as underwriting, acting as an intermediary between securities issuer and the public.

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Mutual Fund

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An investment vehicle made up of a pool of funds from many investors to invest in securities such as stocks, bonds, money market instruments, and other assets.

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Foreign Exchange Market (Forex)

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A global decentralized or over-the-counter market for trading currencies, allowing conversion of currencies and determining the foreign exchange rate.

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Securitization

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The process of pooling various types of contractual debt such as mortgages, auto loans, and credit card debt obligations and selling their related cash flows to third-party investors as securities.

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Credit Union

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A member-owned financial cooperative that provides savings, credit and other financial services to its members, often with better interest rates and fees.

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Asset Management Company (AMC)

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A firm that invests pooled funds from clients into a variety of securities and assets, with the goal of growing their investment portfolios.

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Hedge Fund

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A limited partnership of investors that uses high risk methods, such as investing with borrowed money, to realize large capital gains.

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Savings and Loan Association

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A financial institution that specializes in accepting savings deposits and making mortgage and other loans.

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Central Bank

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The authority responsible for monetary policy, issuing currency, and regulating the money supply and interest rates in the economy.

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Private Equity

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A form of investment in private companies not listed on the stock exchange, often to acquire, manage, and sell them with the intention of realizing a profit.

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Stock Exchange

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A platform where shares of public companies are traded, facilitating capital raising for businesses and investment opportunities for individuals.

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Credit Rating Agency

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A company that assigns credit ratings which rate a debtor's ability to pay back debt by making timely interest payments and the likelihood of default.

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Derivatives Market

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A market for financial instruments such as futures, options, and swaps which derive their value from an underlying asset's price movement.

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Futures Contract

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A standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future, between parties not known to each other.

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Sovereign Wealth Fund (SWF)

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State-owned investment funds or entities that are commonly established from balance of payments surpluses, official foreign currency operations, proceeds of privatizations, governmental transfer payments, fiscal surpluses, and/or receipts resulting from resource exports.

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Factoring

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A financial transaction whereby a business sells its accounts receivable to a third party at a discount in exchange for immediate cash with which to finance continued business.

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Special Purpose Vehicle (SPV)

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A subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt.

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Options Contract

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A contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a set price on or before a certain date.

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