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37 Cards in this Set
- Front
- Back
- 3rd side (hint)
System |
Composed of several parts with interrelated functions |
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Financial system |
Principally responsible for the flow of money or funds from the lender to the borrower |
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There is no standard structure of a financial system. The type of government and the economic system determine structure |
Info slide |
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Bangko Sentral ng Pilipinas |
Regulates the operations of financial institutions and financial intermediaries |
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1) Financial institutions 2) Financial markets 3) Financial instruments 4) Lenders and borrowers |
Basic elements of a financial system |
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Financial institutions |
Provide financial services in the form of loan, credit, fund administration, financing, depository, and safekeeping |
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Depository institutions |
Financial institution that accept deposits, extend loans to borrowers, transfer funds, and manage funds for investment purposes |
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Banks |
Accept deposits and bills payment, provide loans, and facilitate the transfer of funds domestically or abroad |
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Universal bank |
Biggest bank in terms of assets, loan portfolio, and revenue |
Minimum of 20 billion pesos |
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Commercial bank |
Provides commercial loans and offers investment products in addition to the regular banking service |
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Financial intermediary |
· Middleperson between the investors and the borrowers · Receive money from one party and offer it to another as financial aid |
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Mutual Funds |
Accumulate money by selling shares of stocks or bonds of publicly-listed corporations to individuals or corporate investors |
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Pension Fund |
Set up by a business for purpose of paying the pension requirements of all private-sector employees who retire from the business organization |
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Insurance Companies |
Pooling together the proceeds of insurance policies sold to the public and investing the accumulated funds in high-yield maturing securities from investment houses |
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Investment Institution |
· Company engaged in buying securities of other companies which are listed in the stock exchange for investment purposes only · Holds on to the securities it acquired from other companies |
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1) Depository institutions 2) Financial intermediaries 3) Investment institutions |
Classification of financial institutions |
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Market |
Place where sellers and buyers of goods and services meet |
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Financial Market |
Place where selling-buying activity occurs to trade equity securities such as bonds and stocks, currencies, derivative securities, notes, and mortgages |
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Trading Activity |
Selling-buying transaction happening in the financial markety |
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Capital Market |
Market whete stocks and bonds are issued for medium and long term periods |
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Equity securities, debt securities |
Stocks are treated as ________ while bonds are considered ________ |
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Dividends |
Investors who hold stocks receive return in the form of |
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Interest |
Investors who hold bonds earn income in the form of |
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Philippine Stock Exchange |
Capital market in the Philippines |
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Money Market |
· Short-term security / trading securities · Highly liquid & readily marketable |
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Primary Market |
·Corporation can issue new shares of stock · Between issuing corporation and investors |
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Secondary Market |
Financi securities are traded between or among investors (no issuance of new shares) |
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Public Market |
Financial securities of publicly-listed corporation are traded following a standardized contract agreement and procedures |
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Financial Instruments |
Formation of financial assets of one entity and at the same time the creation of a financial liability or an equity instrument in another entity |
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Bond |
Financial instrument that represents a contractual debt of the party issuing the bond (lol duh) |
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Bond Indenture |
Certificate that evidences bond |
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Stock |
Financial security that signifies ownership of the assets of the corporation |
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Shareholders / stockholders |
Holders of the shares of stock (evidenced by the stock certificate) |
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Ordinary share |
Another word of common stock |
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Common stock |
· Same rights and privileges in terms of dividend or asset distribution with other stockholders · Least priority on income of corporation · Least preference on assets |
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Common stock |
Voting stock (one share = one vote) |
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Preference Share |
Preferred over common stock |
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