AMERICAN FINANCIAL SYSTEM

U.S. ECONOMY
The economy of the United States is the world's

largest national economy. Currency- United States Dollar(USD) GDP growth- 3.0% 5th of global GDP at purchasing power parity. Per capita GDP(PPP)- 6th highest in the world.

FEDERAL RESERVE SYSTEM

The Federal Reserve System (also known as the

Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created in 1913 with the enactment of the Federal Reserve Act. Duties are to conduct the nation's monetary policy, supervise and regulate banking institutions, maintain the stability of the financial system and provide financial services to depository institutions, the U.S. government, and foreign official institutions. Headquarters- Washington, D.C. Chairman- Ben Bernanke

FINACIAL SYSTEM

The financial system is the process by which money flows from savers to users

TYPES OF SECURITIES
Securities
Financial instruments Obligations on the part of the issuer Businesses and Governments Provide rate of return to purchasers

Money Market Instruments

Bonds Stock

MONEY MARKAT INSTRUMENT

Short-term Debt Securities
Issued by governments, financial institutions and

corporations
Investors are paid interest for the use of their

funds.
Generally low-risk

U.S. Treasury bills

Commercial paper Bank certificates of deposit

BONDS
Government Bonds
Bonds sold by the U.S. Department of the Treasury.

Municipal Bonds
Bonds issued by state or local governments Revenue bonds are used toward a project that will produce revenue, General Obligation Bonds are not.

STOCKS
Common stock ownership claims in

corporations.
Vote on major company decisions Cash dividends Price appreciation

Preferred stock stockholders with preference

in the payment of dividends.

CONVERTIBLE SECURITIES

Stockholder has the right to exchange the bond or preferred stock for a fixed number of shares of common stock

FINANCIAL MARKETS
Primary Market firms and governments issue

securities and sell them initially to the public.

When a firm offers a stock for sale to the general

public for the first time.

Secondary Market collection of financial

markets in which previously issued securities are traded among investors.

STOCK MARKETS

Stock market (exchange) market in which common stocks are traded, such as the New York Stock Exchange

STOCK EXCHANGES
The New York Stock Exchange the Big Board is

the most famous and one of the oldest stock markets in the world. More than 3,000 stocks are listed on NYSE.
The Nasdaq Stock Market the second largest

stock market. Over 5,000 companies have their stocks listed on Nasdaq but many are smaller firms.
Other U.S. Stock Markets The American Stock Exchange/AMEX Regional Stock Exchanges Foreign Markets

FINANCIAL INSTITUTIONS

Commercial Banks

Savings Banks and Credit Unions

Non-depository Institutions

SAVINGS BANKS & CREDIT UNIONS

Offer a variety of consumer services

85% of their loans are real estate loans

Credit unions are cooperative financial

institutions that are owned by depositors/members.

Credit unions are created to serve consumers.
Insured by National Credit Union Administration

(NCUA) which functions the same as the FDIC

NON DEPOSITORY FINANCIAL INSTITUTIONS

Insurance Companies Pension Funds Finance Companies

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