Glossary

  1. A
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  3. C
  4. D
  5. E
  6. F
  7. G
  8. H
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  10. J
  11. K
  12. L
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  14. N
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  24. X
  25. Y
  26. Z

F

FACE VALUE

For bonds, face value is the amount repaid at maturity, on which the periodic coupon payments are calculated. For stocks, it represents a fraction of the company's capital. It is usually different from the actual value of the security.

FEE INFORMATION DOCUMENT (FID)

The Fee Information Document, is based on a standardized European template, provided by banks to consumers interested in opening a current account. The document provides information about the fees for using the main services linked to the account (the list of these services has been published by the Bank of Italy). The document helps you to compare these fees with those of other accounts. The fee information document indicates the Comprehensive Costs Indicator (ICC).

FEES

Fees include, for example, the costs of originating and managing a loan; other expenses may be taxes or insurance. Some fees and expenses are fixed, regardless of the amount of the loan, so they will have a greater impact if the amount of the loan requested is low.

FIN-NET

Fin-net is a network of alternative dispute resolution organizations active in the banking, financial and insurance sectors (for example, the Banking and Financial Ombudsman) of the Member States, set up by the European Commission since 2001. The network encourages cooperation between the alternative dispute resolution systems operating in the financial services sector and provides consumers with easy access to alternative dispute resolution in cases concerning the cross-border provision of financial services.

FINANCIAL COMPANY

A non-bank entity authorized to lend money (in the form of consumer loans, leases and factoring, for example) and issue guarantees.

FIXED Interest Rate

When the interest rate on a loan (usually a mortgage) is fixed, it remains unchanged for the duration of the mortgage.

The disadvantage of this type of mortgage is that the borrower cannot benefit from any reduction in market rates that may occur over the life of the mortgage.

A fixed-rate mortgage is recommended for those who worry that market rates might rise and, when signing the contract, want to be sure of the amounts of the individual payments and the total amount of the debt to be repaid.

To offset these advantages, the lender often applies more onerous conditions compared with a variable-rate mortgage.

FOREIGN EXCHANGE OPERATIONS

The Eurosystem conducts foreign exchange operations in accordance with the Treaty establishing the European Community. The Bank of Italy may be called upon to intervene on the foreign exchange market. It may also be asked to intervene in connection with the Exchange Rate Mechanism (ERM II), which sets out the main lines of cooperation in exchange rate policies between the European Central Bank (ECB) and the central banks of the European Union (EU) Member States that have not adopted the euro. It can also engage in foreign exchange operations to alter the composition of its foreign currency reserves in order to achieve the best balance between risk and return.

FRENCH AMORTIZATION

In Italy, the most commonly used method of amortization is French amortization: the fixed instalments consist of increasing principal values and decreasing interest values. At the start, the instalments mostly consist of interest. Since interest is applied on the remaining principal, as the principal declines, so does the amount of interest, while the share of principal included in the instalment increases.