Bankrate's financial glossary
Did you run across an unfamiliar term when applying for a mortgage, credit card
or auto loan? Find the meaning here, along with definitions of other financial words
and phrases, in Bankrate.com's financial glossary.
Bond Buyer's 20 bond index
Bond Buyer is a daily publication, commonly known as the Red Book, featuring many essential statistics and index figures relative to the fixed income markets. This index tracks the prices of a selected group of municipal bonds. The index is used to set the cost of municipal debt. It helps indicate the direction of municipal bond prices, but otherwise has little impact on most ordinary investors.
A brokered CD is a certificate of deposit sold by a middleman, called a broker. Financial institutions use brokers to market their CDs to help them gain deposits. The rates on brokered CDs tend to be very competitive because the financial institution is competing directly with other institutions for your deposit.
Short for compounding method. Used in Bankrate tables. These include: S--Simple interest. A--Compounded annually. H--Compounded semi-annually. Q--Compounded quarterly. M--Compounded monthly. D--Compounded daily.
Used in Bankrate tables. These include: S--Simple interest. A--Compounded annually. H--Compounded semi-annually. Q--Compounded quarterly. M--Compounded monthly. D--Compounded daily.
The interest rate on a bond. It's expressed as an annual percentage of the face value. A bond that pays 6 percent interest has a 6 percent coupon.
The interest rate at which financial institutions that are members of the Federal Reserve System (Fed) may borrow on a short-term basis directly to cover temporary deficiencies in the bank’s reserves. Banks borrow from the Fed as a last resort because frequent borrowing would raise concern by bank regulators.
Effective federal funds rate
The average interest rate that federal funds actually trade at in a day. The federal funds rate will remain stable for months at a time, but the effective rate is a volatile one that will vary every business day.
Federal Deposit Insurance Corp. An agency of the U.S. government that manages the bank insurance funds, which insure deposits at banks and other qualifying financial institutions up to $250,000 per account ($250,000 on retirement accounts) in interest and principal. FDIC insurance is mandatory for all nationally chartered banks and all banks that are members of the Federal Reserve System. On Oct. 3, 2008, Congress raised the FDIC insurance limit on individual accounts to $250,000 from $100,000. This will remain in effect until Dec. 31, 2009, unless it is renewed.
Congress founded the Federal Reserve, the central bank of the United States, in 1913. It conducts the nation's monetary policy and regulates its banks in order to achieve a flexible and stable economy. The seven members of the Board of Governors of the Federal Reserve System are nominated by the President and confirmed by the Senate to serve 14-year terms. The chairman and the vice chairman of the board are named by the President from among the members and are confirmed by the Senate. They serve a term of four years.
Federal Advisory Council
An advisory group consisting of one member elected from each of the 12 Federal Reserve Districts who meet with the Federal Reserve Board of Governors at least four times each year to make recommendations on business and financial matters.