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BUSINESS FINANCE > BUSINESS FINANCE WEEK 2 > Flashcards

BUSINESS FINANCE WEEK 2 Flashcards

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1
Q

A financial institution licensed to receive deposits and make loans. It also provides financial services such as wealth management, currency exchange, and safe deposit boxes.

A

BANKS

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2
Q

A company or government agency that provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.

A

INSURANCE COMPANIES

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3
Q

A security that represents the ownership of a fraction of a corporation.

A

STOCKS

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4
Q

Assets that can be traded, or they can also be seen as packages of capital that may be traded.

A

FINANCIAL INSTRUMENTS

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5
Q

Financial institutions that help one buy and sell securities. They act as the middleman between the buyer and the seller.

A

STOCK BROKERAGE FIRMS

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6
Q

An entity that acts as the middleman between two parties in a financial transaction, such as a commercial bank, investment bank, mutual fund, or pension fund.

A

FINANCIAL INTERMEDIARY

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7
Q

A payment made by a corporation to its shareholders.

A

DIVIDENDS

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8
Q

Broadly refers to any marketplace where the trading of securities occurs.

A

FINANCIAL MARKET

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9
Q

A form of debt that the issuing entity promises to repay at some point in the future.

A

BONDS

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10
Q

is a private non-profit and nonstock organization created to provide and maintain a fair, efficient, transparent and orderly market for the purchase and sale of securities such as stocks, warrants, bonds, and others.

A

PHILIPPINES STOCK EXCHANGE

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11
Q

are venues where the different stakeholders of security do their act, either lending money or borrowing money or invest.

A

FINANCIAL MARKETS

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12
Q

Give the 6 financial markets exist

A
  1. Stocks market
  2. Bond market
  3. Currency market
  4. Options market
  5. Derivatives market
  6. Commodities market
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13
Q

What are the 2 common types of markets?

A
  1. PRIMARY MARKET
  2. SECONDARY MARKET
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14
Q

This is a venue that deals with the new issuance and sale of securities by the government and the corporation. The government and the corporations are the vendors in this market, this transaction is called Initial Public Offering (IPO).

A

PRIMARY MARKET

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15
Q

This is a venue where the different individuals and corporation will sell their securities to the public which was bought during the IPO

A

SECONDARY MARKET

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16
Q

exists to provide a wide variety of deposit, lending, and investment products to individuals, businesses, or both.
While some focus on providing services and accounts for the general public, others are more likely to serve only certain consumers with more specialized offerings.

A

FINANCIAL INSTITUTIONS

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17
Q

Give the 6 examples of Financial institutions

A
  1. COMMERCIAL BANKS
  2. INSURANCE COMPANIES
  3. MUTUAL FUNDS
  4. BROKERAGE FIRMS
  5. PENSION FUNDS
  6. OTHER FINANCIAL INSTITUTION
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18
Q

Represent the largest group of financial institutions. Individuals deposit funds at _______________________, which use the deposited funds to provide commercial loans to firms and personal loans to individuals, and purchase debt securities issued by firms or government agencies.

A

COMMERCIAL BANKS

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19
Q

A practice or arrangement by which a company or government agency provides a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium.

A

INSURANCE COMPANIES

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20
Q

These are owned by investment companies which enable small investors to enjoy the benefits of investing in a diversified portfolio of securities purchased on their behalf by professional investment manager.

A

MUTUAL FUNDS

21
Q

assist individuals and institutions in buying and selling securities among available investors.

A

BROKERAGE FIRMS

22
Q

are financial institutions that receive payments from employees and invest the proceeds on their behalf.

A

PENSION FUNDS

23
Q

include pension funds like Government Service Insurance System (GSIS) and Social Security System (SSS), Unit Investment trust fund (UITF) and credit unions and others.
FINANCIAL I

A

OTHER FINANCIAL INSTITUTIONS

24
Q

is a real or virtual document representing a legal agreement involving any kind of monetary value.

A

FINANCIAL INSTRUMENTS

25
Q

What are the 2 examples of Financial Instruments

A
  1. BONDS
  2. STOCKS
26
Q

What are the 2 major categories of financial instrument?

A
  1. EQUITY SECURITIES
  2. DEBT SECURITIES
27
Q

2 common examples of equity securities

A
  1. COMMON STOCKS
  2. PREFERRED STOCKS
28
Q

2 types of Debt Securities

A
  1. TREASURY BONDS AND TREASURY BILLS
  2. CORPORATE BONDS
29
Q

You own one percent in everything that the company has or may have in the future.

A

EQUITY SECURITIES

30
Q

Generally have fixed returns due to fixed interest rates.
These financial instruments are sold if a company is in need of funding and the proceeds of this will be used to finance the company’s plans.

A

DEBT SECURITIES

31
Q

Is a security that represents ownership in a corporation.

Holders of this elect the board of directors and vote on corporate policies.

This form of equity ownership typically yields higher rates of return on long term.

However, in the event of liquidation, common shareholders have rights to a company’s assets only after bondholders, preferred shareholders, and other debtholders are paid in full.

A

COMMON STOCKS

32
Q

Has priority over a common stock in terms of claims over the assets of a company.

If a company is to be liquidated and its assets have to be distributed, no asset will be distributed to common stockholders unless all the claims of the preferred stockholders have been given.

A

PREFERRED STOCKS

33
Q

Are issued by the Philippine government.

These bonds and bills have usually low interest rates and have very low risk of default since the government assures that these will be paid.

A

TREASURY BONDS AND TREASURY BILLS

34
Q

Are issued by publicly listed companies.

These bonds usually have higher interest rates than Treasury bonds.

If the company which issued the bonds goes bankrupt, the holder of the bonds will no longer receive any return from their investment and even their principal investment can be wiped out.

A

CORPORATE BONDS

35
Q

What are the 4 factors influence the stock market price?

A
  1. ECONOMICS
  2. POLITICS
  3. NATURAL AND MAN-MADE DISASTER
  4. MARKET PSYCHOLOGY
36
Q

factors such as interest rates, inflation unemployment and economic growth often move stock markets.

A

ECONOMICS

37
Q

A belief by investors that control of the government by one party or the other will hurt or benefit them can move the market as whole.

A

POLITICS

38
Q

It it natural factor that influence the stock market price made by people.

A

NATURAL AND MAN-MADE DISASTER

39
Q

At the end of the day, swings in the stock market are caused by human beings. There are boom periods in a rising market when everyone wants to buy. Alternatively, there are also periods of panic when almost every investor is scrambling to sell

A

MARKET PSYCHOLOGY

40
Q

made by the business through operations, investment, and financing transactions over a period of time. This statement is preferred mostly by investors to look at when analyzing a company’s performance.

A

CASH FLOW STATEMENT

41
Q

this is where we can measure the amount of cash that the company has made through its regular business operations.

EXAMPLES:

Salaries of employees
Sales from Products or Services
Marketing Cost
Delivery of goods
Taxes

A

CASH FROM OPERATING ACTIVITIES

42
Q

this statement provides the information regarding the buying and selling of long-term assets such as property, plant and equipment.

EXAMPLES:
1. buying/selling of business assets such as lands, buildings, equipment etc.

2.Dividend earnings from stocks investments.

A

CASH FLOW FROM INVESTMENT ACTIVITIES

43
Q

In this section one can see the amount of cash the company has raised to fund the company through all forms of debt like stocks bonds etc.

EXAMPLES:

Insuance of Company Stocks and Bonds.

Loan and credit obligations

Cash receivables through Loans and credits.

Paying Dividends to investors

A

CASH FLOW FROM FINANCING ACTIVITIES

44
Q

FOUR MAJOR TYPES OF DECISIONS FOR A FINANCIAL MANAGER

A
  1. FINANCING DECISIONS
  2. INVESTING DECISIONS
  3. OPERATING DECISIONS
  4. RETURN OF CAPITAL OR DIVIDEND DISTRIBUTION DECISION
45
Q

These decisions are made in order for the company to have the appropriate capital structure.

This involves how much borrowing or how much capital is to be allocated in financing for acquiring an asset, long term investments or working capital for the day to day operations of the company.

A

FINANCING DECISIONS

46
Q

concerned about the selection of assets in which funds will be invested by a company.

Basically, this is the how and where to invest the funds.

A

INVESTING DECISIONS

47
Q

involves in dealing with the daily operations of a company that ensures that the company has sufficient cash to carry on with the day to day operations and keep away from unnecessary expenses.

A

OPERATING DECISION

48
Q

These decisions involve the payouts to the shareholders and its proportion of earning per share, how often would these payments be made or convince the shareholders to retain the earnings within the company.

A

RETURN OF CAPITAL OR DIVIDEND DISTRIBUTION DECISIONS

BUSINESS FINANCE (3 decks)

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