Question

"What are the seven different types of financial institutions? Include a description of the main services offered by each." (Cornett, Adair, & Nofsinger, 2016). Distinguished-level: Provide a definition of the term, liquidity.

Answer 1

1- Commercial Bank- commercial banks are depository institutions that accept the deposit from public and grant loans to the borrower.

2- Insurance companies - These are institutions which provide insurance services and loss cover to the insured in case of happening for any uncertain event.

3- Mutual funds- These are the depository institutions which collect the funds from small investors and invest into different securities. Mutual funds provide portfolio management services

4- Pension funds- These are the institutions which provide pension funds services, manages the savings of investors and invest for the wealth creation for retirement payment

5- Finance companies - These are the companies which provide credit services to individuals and organization. These institutions provide loans with collateral securities

6-Security firm and investment banks- These are the institutions which provide stock brokering services, trading of financial securities and underwriting services

7- Thrift - These Institutions are a kind of depository institutions which provided their credit services in one segment only like consumer loan, auto loan etc.

Liquidity refers to the situation in which an organization can easily converts it assets into cash and  and at the the rate to which such a conversion takes place at a fair market value