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Capital Markets and Financial Institutions
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Microfinance Institution
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.
Commercial Bank
A financial institution that provides services such as accepting deposits, providing business loans, and offering basic investment products.
Exchange-Traded Fund (ETF)
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.
Pension Fund
An investment pool set aside by a corporation, government agency, or other organization to fund its employees' retirement benefits.
Treasury Bills (T-Bills)
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.
Certificate of Deposit (CD)
A savings certificate with a fixed maturity date and specified fixed interest rate that can be issued in any denomination by banks.
Bond Market
A marketplace for buying and selling debt securities which governments and corporations issue to raise capital, offering investors interest income.
Insurance Company
A financial institution that provides risk management by compensating for losses in exchange for payment of premiums.
Money Market
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.
Commodity Market
A financial market that trades in primary economic sector rather than manufactured products, such as gold, oil, and grains.
Venture Capital
A type of private equity financing provided by firms to small, early-stage, emerging companies deemed to have high growth potential.
Real Estate Investment Trust (REIT)
A company that owns, operates, or finances income-generating real estate, allowing investors to buy shares in commercial real estate portfolios.
Investment Bank
A financial intermediary that specializes in large and complex financial transactions such as underwriting, acting as an intermediary between securities issuer and the public.
Mutual Fund
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.
Foreign Exchange Market (Forex)
A global decentralized or over-the-counter market for trading currencies, allowing conversion of currencies and determining the foreign exchange rate.
Securitization
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.
Credit Union
A member-owned financial cooperative that provides savings, credit and other financial services to its members, often with better interest rates and fees.
Asset Management Company (AMC)
A firm that invests pooled funds from clients into a variety of securities and assets, with the goal of growing their investment portfolios.
Hedge Fund
A limited partnership of investors that uses high risk methods, such as investing with borrowed money, to realize large capital gains.
Savings and Loan Association
A financial institution that specializes in accepting savings deposits and making mortgage and other loans.
Central Bank
The authority responsible for monetary policy, issuing currency, and regulating the money supply and interest rates in the economy.
Private Equity
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.
Stock Exchange
A platform where shares of public companies are traded, facilitating capital raising for businesses and investment opportunities for individuals.
Credit Rating Agency
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.
Derivatives Market
A market for financial instruments such as futures, options, and swaps which derive their value from an underlying asset's price movement.
Futures Contract
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.
Sovereign Wealth Fund (SWF)
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.
Factoring
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.
Special Purpose Vehicle (SPV)
A subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt.
Options Contract
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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