Introduction to Finance

Federal Home Loan Mortgage Corporation 
(Freddie Mac)
Formed to aid mortgage mar-
kets by purchasing and holding mortgage loans
Federal National Mortgage Association 
(Fannie Mae)
Created to support the fi nan-
cial markets by purchasing home mortgages 
from banks and, thus, freeing the proceeds, 
which could be lent to other borrowers
Federal Reserve fl oat
Temporary increase 
in bank reserves that results when checks are 
credited to the reserve account of the depositing 
bank before they are debited from the account 
of the banks on which they are drawn
Federal Reserve System (FED)
U.S. 
Central 
bank that sets monetary policy and regulates 
banking system
Federal statutory debt limits
Limits on the 
federal debt set by congress
Fiat money
Legal tender proclaimed to be 
money by law
Field warehouse
A warehouse on the 
grounds of the borrowing business establish-
ment
Finance
Study of how individuals, institu-
tions, governments, and businesses acquire, 
spend, and manage money and other fi nancial 
assets
Finance companies
Provide loans directly to 
consumers and businesses or aid individuals in 
obtaining fi nancing
Financial account
Summary of the fl ow of 
funds between one country and all other coun-
tries involving foreign investments in fi xed 
assets and fi nancial assets during a specifi ed 
time period
Financial assets
(1) claims against the 
income or assets of individuals, businesses, 
and governments; (2) money, debt instruments, 
equity securities, and other fi nancial contracts 
that are backed by real assets and the earning 
abilities of issuers
Financial environment
Financial system, 
institutions or intermediaries, fi nancial mar-
kets, business fi rms, individuals, and global 
interactions that contribute to an effi
ciently 
operating economy