Exam #1 Flashcards by ANDREN ROSE CREDO

Two types of investors:

Retail investors
Institutional investors

How well did you know this?

Not at all

Perfectly

any issuance succeeding the IPO

secondary public offering

How well did you know this?

Not at all

Perfectly

Where does IPO and 2PO raised?

primary market

How well did you know this?

Not at all

Perfectly

It is where the trades are made

secondary market

How well did you know this?

Not at all

Perfectly

firms that provide financial services and advice to their clients

Financial institutions

How well did you know this?

Not at all

Perfectly

Salient points of financial institution definition

Provide financial services
Advice clients
Regulated by laws

How well did you know this?

Not at all

Perfectly

3 Roles of Financial Institutions

Act as intermediary between the capital and debt markets
Responsible for the transfer of funds from investors to companies
Key entities that control the flow of money in the economy

How well did you know this?

Not at all

Perfectly

Types of financial institutions

Banks
Credit unions
Stock brokerage
Asset Management firms
Insurance companies
Finance companies
Remittance companies
Trust companies
FOREX

How well did you know this?

Not at all

Perfectly

Minimum amount to have your money managed in asset management firms

20 million

How well did you know this?

Not at all

Perfectly

In this financial institution, money that is lent out is contributions.

Financial companies

How well did you know this?

Not at all

Perfectly

This is different from assurance companies.

Insurance companies

How well did you know this?

Not at all

Perfectly

3 people involved in trust companies:

Trustee
Trustor
Beneficiary

How well did you know this?

Not at all

Perfectly

The collection of foreign currency that a country holds

Gross International Reserves

How well did you know this?

Not at all

Perfectly

4 phases of business cycle

Prosperity
Recovery
Recession
Depression

How well did you know this?

Not at all

Perfectly

a class that best gauge of economic activity

middle class

How well did you know this?

Not at all

Perfectly

they bridge the gap between borrowers and issuers of bonds

credit-rating agencies

How well did you know this?

Not at all

Perfectly

This contributed to the growth of consumer loans in the country and will be felt in the long run

investment grade ratings

How well did you know this?

Not at all

Perfectly

it provides job opportunities and compensation

stability in the economy

How well did you know this?

Not at all

Perfectly

There will be challenges that will come along the way that will test the resilience of the Philippine economy but the ________ will buoy the economy

strong economic fundamentals

How well did you know this?

Not at all

Perfectly

Tiger Cub Economies

Indonesia, Malaysia, the Philippines, Thailand and Vietnam

How well did you know this?

Not at all

Perfectly

Rapid and sustained poverty reduction

Inclusive growth

How well did you know this?

Not at all

Perfectly

allows people to contribute to and benefit from economic growth

inclusive growth

How well did you know this?

Not at all

Perfectly

rapid pace of growth is unquestionably necessary for substantial poverty reduction, but for this growth to be sustainable in the long run, it should be broad-based across sectors, and inclusive of the large part of the country’s labor

inclusive growth

How well did you know this?

Not at all

Perfectly

implies a direct link between the macro and micro determinants of growth

inclusive growth

How well did you know this?

Not at all

Perfectly

8 indicators of inclusive economic growth

1. Reduced poverty and inequality 2. economic growth and employment 3. key infrastructure endowments 4. access to education and health 5. access to basic infrastructure utilities and services 6. gender equality and opportunity 7. social safety nets 8. good governance and institutions

It captures the importance of structural transformation for economic diversification and competition, including creative destruction of jobs and firms

micro dimension

Ways that companies raise funds

- finance capital expenditures (acquisitions, investments) - working capital - pay off/refinance existing debt

the stock exchange of the Philippines

PSE - Philippine Stock Exchange

an organized market for tradable stocks and where brokers and traders buy/sell stocks

Stock Exchange

main index of the PSE and represents the general trend of the market

PSEi

How many companies in the PSEi

30 most active companies

Considerations of PSEi

- public float - liquidity - market capitalization

what do you call those companies not included in PSEi

All shares

(Sector indices) Financials

BDO BPI MBT

(Sector indices) Industrials

MER PCOR URC JFC

(Sector indices) Holding firms

AC AEV SM JGS

(Sector indices) Property

ALI SMPH MEG

(Sector indices) Services

ICT GLO TEL ABS

(Sector indices) Mining and Oil

NIKL PX LC

operating members are entitled to how many trading booth

1 only

Why buy stocks?

1. Capital appreciation 2. Ownership in the business 3. Claim

How do companies issue stocks?

1. Initial public offering (IPO) 2. Secondary public offering (2PO) 3. Stock Rights Offering (SRO)

Classification of stocks

common stocks preferred stocks warrants

3 types of dividends

Cash dividends Stock dividends Property dividends

date of announcement of dividends

Dividend declaration date

the day that will not entitle a buyer to receive a dividend

Ex-dividend date

the date when the company verifies who are entitled to receive the dividends

Record date

Dividend is credited to the trading accounts

Payment date

PSE uses what type of trading

scripless trading

Type of trading in which settlement is done via the book-entry system (no physical transfer of certificate) thru Philippine Central Depository (PCD)

Scripless trading

Stock certificates have to be lodged to be traded in the exchange

First consideration when buying a stock

choosing a stock broker

Settlement date

T + 2 (T - transaction date)

Seller receive their proceeds, when?

after 2 working days

3 institutions that play an important role in the settlement cycle

1. Securities Clearing Corporation of the Philippines 2. Settlement Banks 3. Philippine Depository and Trust Corporation (PDTC)

agency that facilitates stock clearing and settlement

Securities Clearing Corporation of the Philippines

maintains cash accounts

Settlement banks

responsible for safekeeping and overseeing of securities for clients

Philippine Depository and Trust Corporation (PDTC)

Types of Orders based on lot size

1. Normal lot 2. Odd lot 3. Board lot

(Type of orders) within the board lot table

normal lot

(type of orders) less than the normal unit of trading

Odd lot

(type of orders) large number of shares traded at an arranged price between two parties (at least 5M pesos)

Board lot

Investing Procedures (5)

1. Choose a broker 2. Open an account 3. Give your order 4. Pay your settlement date 5. Receive your proceeds/shares

the maximum and minimum price of the stock for the day

Trading threshold

maximum gain

50%m

maximum loss

40%

Orders that exceed the trading band are automatically rejected, EXCEPT when:

1. the stock was suspended for at least a year 2. listing by way of introduction (first day only)

2 ways to measure thresholds

1. Dynamic threshold 2. Static threshold

Classes under dynamic threshold

Class A - below 20 tranx in a month (20%) Class B - 20 to 500 (15%) Class C - 501 and above (10%)

What is the difference between the selling transaction and buying transaction?

Stock transaction tax is levied to the seller, not the buyer

Different types of orders

1. Market Order 2. Limit Order 3. Day Order 4. Good Till Cancelled (GTC) 5. Stop Loss Order

(type of order) buy or sell immediately at the best available price

Market order

(type of order) Sets the max/min price at which one is willing to buy/sell stock

Limit order

(type of order) An order valid for that day

Day order

(type of order) order remains open in succeeding trading days until it is finally executive or cancelled

Good TIll Cancelled (GTC)

(type of order) to limit an investor's loss on a position can be a day order or GTC

Stop Loss Order

Plan that fits your own goals and risk tolerance and should be realistic

Trading plan

Styles as a trader

1. Position traders 2. Swing traders 3. Day traders

(trader) medium to long term

Position traders

(trader) buy on oversold levels and sell on overbought levels

Swing traders

(trader) frequent buying and selling

Day traders

2 approaches to fundamental analysis

1. Top down approach 3. Bottom up approacj

3 Factors/considerations in Company Analysis

Sensible business plan Solid management Financial analysis

Ratios do not mean anything until they are compared to:

1. Historical or future data 2. Industry or sector average 3. Competitors

The field of technical analysis is based on 3 assumptions

1. market discounts everything 2. price moves in trends 3. history tends to repeat itself

(company analysis) A competitive advantage

Sensible business plan

(company analysis) Well-managed track record

Solid management

(company analysis) Sound financials, great potential earnings

Financial analysis

What is given in scripless trading when you buy a stock?

Statement of Account

Settlement done via the book-entry system thru _________

Philippine Central Depository (PCD)