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Financial Glossary
Understanding Financial, Credit, & Real Estate Terms


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Savings account   —  A service depository institutions offer whereby people can deposit their money for future use and earn interest.

Savings and Loans Associations  —  A state or federally chartered financial institution that accepts savings and checkable deposits from the public and invests them primarily in mortgage loans. A savings and loan association may be either a mutual or capital stock institution and may also make loans to businesses and consumers.

Savings bank  —  Depository institution historically engaged primarily in accepting consumer savings deposits and in originating and investing in securities and residential mortgage loans; now may offer checking-type deposits and make a wider range of loans.

Section 8  —  A program of the Department of Housing and Urban Development (HUD) that provides rental assistance to low- and very low-income families. HUD pays the difference between the market rent of a unit and the amount that the tenant is able to pay.

Securities  —  Paper certificates (definitive securities) or electronic records (book-entry securities) evidencing ownership of equity (stocks) or debt obligations (bonds).

Securities and Exchange Commission (SEC)   —  An independent, nonpartisan, quasi-judicial regulatory agency with responsibility for administering the federal securities laws. The purpose of these laws is to protect investors and to ensure that investors have access to disclosure of all material information concerning publicly traded securities. The Commission also regulates firms engaged in the purchase or sale of securities, people who provide investment advice, and investment companies.

Security interest   —  The creditor's right to take property or a portion of property offered as security.

Seigniorage   —  The profit which results from the difference between the cost of making coins and currency and the exchange value of coin and currency in the market.

Self-Regulatory Organizations (SRO)   —  Nongovernment organizations that have statutory responsibility to regulate their own members such as the New York Stock Exchange (NYSE) and National Association Of Securities Dealers (NASD).

Seller's points   —  In reference to a loan, seller's points consist of a lump sum paid by the seller to the buyer's creditor to reduce the cost of the loan to the buyer. This payment is either required by the creditor or volunteered by the seller, usually in a loan to buy real estate. Generally, one point equals one percent of the loan amount. See also points.

Service charge   —  A component of some finance charges, such as the fee for triggering an overdraft checking account into use.

Short-term interest rates   —  Interest rates on loan contracts-or debt instruments such as Treasury bills, bank certificates of deposit or commercial paper-having maturities of less than one year. Often called money market rates.

Simple interest   —  Interest that is paid only on the original amount borrowed for the length of time the borrower has use of the credit. The amount borrowed is referred to as the principal. In the simple interest rate calculation, interest is computed only on that portion of the original principal still owed.

Society for Worldwide Interbank Financial Telecommunications (SWIFT )   —  A message writing system that connects worldwide participating banks, primarily for the purpose of communicating payment information. Frequently, the SWIFT message is only part of an international payment.

Special Drawing Rights (SDR)  —  A type of international money created by the International Monetary Fund (IMF) and allocated to its member nations. SDRs are an international reserve asset, although they are only accounting entries (not actual coin or paper, and not backed by precious metal). Subject to certain conditions of the IMF, a nation that has a balance of payments deficit can use SDRs to settle debts to another nation or to the IMF.

Specie  —  Any monetary gold or silver, whether in the form of bullion (bars) or coins.

Speculation  —  The practice of buying or selling stocks, commodities, land or other types of assets hoping to take advantage of an expected rise or fall in price.

Spot transaction   —  A foreign exchange transaction in which each party promises to pay a certain amount of currency to the other on the same day or within one or two days.

Spot value (or spot price)  —  The value or price at which current transactions of goods and services take place. The spot market is the market in which goods and services are traded for immediate delivery and payment. Purchased or sold "on the spot" as opposed to some later time.

Stability  —  Reliability; dependability

State member bank  —  A bank that is chartered by a state and has elected to join the Federal Reserve System.

Stock market  —  Association where security trading is conducted in an organized system.

Stockholder   —  A person who owns stock in a company and is eligible to share in profits and losses; same as shareholder.

Street name  —  Securities held in the name of brokers, banks or their nominees, instead of in the customer's name.

Subprime Lending  —  Lending provided to those who do not qualify for "prime" rates, those rates reserved for borrowers with virtually blemish-free credit histories. Subprime lending that involves unscrupulous practices is considered predatory.

Substandard  —  A loan that usually lacks current sound worth and paying capacity of borrower or collateral pledged.

Supply  —  The amount of a commodity available for meeting a demand or for purchase at a given price.

Surcharge  —  An extra charge imposed on those who purchase with a credit card instead of cash. (Currently, surcharges for credit card purchases are prohibited.)

Swap  —  An arrangement between the central banks of two countries for standby credit to facilitate the exchange of each other's currencies.

Swap arrangements   —  Short-term reciprocal lines of credit between the Federal Reserve and 14 foreign central banks as well as the Bank for International Settlements. Through a swap transaction, the Federal Reserve can, in effect, borrow foreign currency in order to purchase dollars in the foreign exchange market. In doing so, the demand for dollars and the dollar's foreign exchange value are increased. Similarly, the Federal Reserve can temporarily provide dollars to foreign central banks through swap arrangements.

System  —  A social, economic or political organizational form.