Introduction to Finance

certifi cates of deposit (CDs)
that have a stated maturity and either 
pay a fi xed rate of interest or are sold at a discount. Although records reveal that commercial 
banks issued certifi cates of deposit as early as 1900, a major innovation in the early 1960s 
resulted in a tremendous growth in their importance. Large-denomination CDs for deposits of 
$100,000 or more were issued in negotiable form, which meant they could be bought and sold. 
Negotiable certifi cates of deposit (negotiable CDs)
were discussed in Chapter 2. The vastly 
increased use of negotiable CDs in the 1960s caused a secondary market for them to develop. 
Today, negotiable CDs issued by banks and other depository institutions are purchased and 
sold in the money markets as readily as most forms of debt obligations.
Other Liabilities 
The second category of liabilities is represented by items that, when 
combined, have a smaller dollar signifi cance than that of deposits. Included are federal funds 
purchased or borrowed from other banks. As discussed in Chapter 2, 
federal funds
are very 
short-term (usually overnight) loans from banks with excess reserves, to banks that need to 
borrow funds to meet minimum reserve requirements. Other borrowed money and liabilities 
include longer-term notes and debt issues, as well as taxes, interest, and wages owed.
Stockholders’ Equity 
Stockholders’ equity includes preferred stock and common 
equity capital. Common equity includes common stock, capital surplus, and retained earn-
certifi cates of deposit (CDs) 
time 
deposits with a stated maturity
Financial Institutions
Opportunities
Financial institutions, such as banks, S&Ls, and credit unions, 
assist businesses and individuals with the fl ow of funds between 
borrowers. Financial intermediary jobs provide the chance to 
work with individuals, small businesses, and large corporations 
on a variety of fi nancial matters, and therefore, provide invaluable 
business world experience. In addition, individuals interested in 
fi nance may fi nd numerous entry-level jobs with strong advance-
ment opportunities.