Chapter 2

Question 1

there are number of available debt instruments in the country with various ?

Answer 1

issuers
maturity
size
coupon
minimum denominations

Question 2

are domestic government debt issued regularly to finance the national government needs for capital

Answer 2

treasury bills

Question 3

are another form of government debt issued and launched in the late 1990s to attract retail investors

Answer 3

Small investors program bills

Question 4

are short-term debt notes used in times of tight liquidity and interest rate volatility

Answer 4

Cash management bills

Question 5

overnight placements in the inter-bank call loan market as a short-term outlet for excess liquidity of banks

Answer 5

Reverse repurchase agreements

Question 6

This is BSP’s principal tool in its open market operations to control liquidity in the financial system.

Answer 6

Reverse repurchase agreements

Question 7

are unsecured debt instruments issued by resident corporations which state the terms and conditions of the borrowing.

Answer 7

Short-term commercial papers

Question 8

are short-term debt obligations issued by large commercial banks.

Answer 8

Bankers’ acceptance

Question 9

Available Money Market Instruments

Answer 9

treasury bills
small investors program bills
Cash management bills
Reverse repurchase agreements
Short-term commercial papers
Bankers’ acceptance
Promissory Notes

Question 10

is dominated by government debt issued regularly.

Answer 10

domestic money market

Question 11

is a major investor in money market.

Answer 11

Banking sector

Question 12

Other major players/investors in the money market

Answer 12

Social Security System
Government Services Insurance System
Home Development Mutual Fund
Trust funds
insurance companies
private pension funds
mutual funds
retail investors

Question 13

are like treasury bills but longer in tenor.

Answer 13

Treasury Bonds

Question 14

are direct unconditional obligation of the Philippine government, like treasury bonds, but shorter in tenor, usually 2 -7 years.

Answer 14

Fixed Rate notes

Question 15

were launched in the late 1990s to attract retail investors. Basically, the government is issuing these instruments with similar characteristics as the regular auctioned instruments.

Answer 15

Small Investors Program bonds

Question 16

are the most common form of corporate borrowings issued by resident corporations.

Answer 16

Long Term Commercial Papers

Question 17

are a pool of homogenous assets that are securitized

Answer 17

Asset Backed Securities

Question 18

Example of asset backed securities

Answer 18

Credit card receivables
mortgages
personal loans

Question 19

are debts of Local Government Units undertaken to finance local government projects.

Answer 19

Municipal Bonds

Question 20

are intended to beef-up the bank’s capital structure in order to comply with the BSP’s capital adequacy ratio.

Answer 20

Tier 2 Capital notes of banks

Question 21

are dollar denominated obligations of the Republic of the Philippines and other private companies.

Answer 21

Dollar-linked Notes

Question 22

Capital Market Debt Instruments

Answer 22

Treasury Bonds
Fixed Rate notes
Small investors program bonds
Long term Commercial Papers
Asset backed securities
Municipal Bonds
Tier 2 Capital notes of banks

Question 23

the largest issuer of debt in the country.

Answer 23

Philippine Government

Question 24

the government assumed or guaranteed part of the debt issued by a number of

Answer 24

Government Owned and Controlled Corporation

Question 25

issuers of private debts are limited to

Answer 25

top domestic companies

Question 26

comprised the bulk of private issuances

Answer 26

Asset-backed securities

Question 27

is a major investor in domestic debt instruments.

Answer 27

The banking sector

Question 28

other major players/investors in the philippine debt market

Answer 28

SSS, GSIS, HDMF, Trust funds, Insurance Companies, Private Pension Funds, and Retail Investors.

Question 29

the country’s first centralized electronic infrastructure for trading of fixed-income securities

Answer 29

Fixed income Exchange

Question 30

is a comprehensive financial market infrastructure that aims to provide and electronic platform for trading,

Answer 30

Fixed Income Exchange

Question 31

what does FIE aims to provide

Answer 31

electronic platform for trading, clearing, and settlement, and depository

Question 32

Most of the issues traded in the Philippine Stock Exchange

Answer 32

shares of common stocks preferred stocks warrants & Philippine Depository Receipts

Question 33

otherwise known as Ordinary shares

Answer 33

Common stocks

Question 34

represent ownership in a company,

Answer 34

Common Stocks

Question 35

Common shareholders are entitled to

Answer 35

Voting rights Pro rata division of profits among stockholders

Question 36

also known as “Preferential Shares

Answer 36

Preferred stocks

Question 37

given preference over common shares

Answer 37

Preferential shares

Question 38

usually carries a specific rate of return and a specified redemption price.

Answer 38

Preferred

Question 39

can be converted into common shares at a specified time and price in the future.

Answer 39

Convertible shares

Question 40

issuers of the Philippine equities market

Answer 40

Financial issues Services issues Holding firms issues Industrial issues Property issues Mining & Oil issues Preferred Warrants, Philippine Deposit Receipts

Question 41

this sector includes banks and other financial institutions

Answer 41

Financial issues

Question 42

this sector includes electricity, power and water

Answer 42

Industrial issues

Question 43

this sector includes companies such as Ayala Corporation, JG Summit Holdings

Answer 43

Holding firms issues

Question 44

this sector includes land developers, and real estate companies.

Answer 44

Property issues

Question 45

this sector includes media; telecommunications; information technology

Answer 45

Services issues

Question 46

examples include PLDT 10% Cumulative convertible Preferred Series; Ayala Corporation

Answer 46

Preferred

Question 47

represent the bulk of the foreign exchange transaction.

Answer 47

Spot transactions

Question 48

the most common foreign exchange transactions are done in the spot market.

Answer 48

Spot transactions

Question 49

a commitment to buy one currency (peso) against another currency (US Dollar) at a future date at a pre-determined foreign exchange rate.

Answer 49

Foreign Exchange Forward Contracts

Question 50

is an agreement between two or more parties, where the cash flows are exchanged in two different currencies based on an agreed notional amount and maturity.

Answer 50

Swap Contracts

Question 51

provides a platform for the buyers and the sellers (banks) to meet with the provision of real time weighted average rate and volume of trades for the peso

Answer 51

Philippine Dealing System (PDS

Question 52

What are the available derivatives instruments

Answer 52

Forward contracts Swap Contracts Option Contracts

Question 53

these are contracts, which obligate the holder to buy or sell an asset at a predetermined delivery price at a predetermined future date.

Answer 53

Forward Contracts

Question 54

these contracts specify a simultaneous exchange in cash flows by both parties based on movements linked to the prices, values, or returns of an underlying asset instruments

Answer 54

Swap contracts

Question 55

is a right but not an obligation to buy or sell an underlying asset at a certain date and price.

Answer 55

Option Contracts

Question 56

otherwise known as the Real Estate Investment Trust Act (REIT)

Answer 56

RA9856

Question 57

establishes the framework for a more secure investment in real estate assets.

Answer 57

Real estate investment Trust Act

Question 58

otherwise known as the Credit Information System Act

Answer 58

RA 9510

Question 59

otherwise known as the Personal Equity Retirement Account Act (PERAA)

Answer 59

RA 9505

Question 60

two types of common shares

Answer 60

Class A shares Class B shares

Question 61

Give Equity observations on the philippine capital Market

Answer 61

Weak corporate governance Limited institutional participation Lack of financial information / regulation Low demand for securities limited number of securities traded Trading concentrated on few issues

Question 62

Give Debt observations on the philippine capital Market

Answer 62

Huge government debts Transparency in rate determination Limited Rating Appeal Importance of Bank