Finals Flashcards
Types of Investment
Deposit
Government Securities
The major DEPOSIT INSTRUMENTS include…
Time Deposit Account
Checking Account
Savings Account
It usually requires a minimum amount of deposit with a fixed term to maturity, meaning the depositor cannot withdraw from his/her account before the fixed maturity date.
Time Deposit Account
This type of account provides a higher fixed rate of return compared to a savings account or a checking account.
Time Deposit Account
It allows the depositor to issue checks from his/her account to pay for various expenditures instead of delivering bills or coins as payment.
Checking Account
Checks issued are subject to a clearing float (usually 3 days) when deposited by the payee.
Checking Account
It provides a low fixed rate of return but provides the convenience of availability by allowing the depositor to easily deposit and withdraw from the account at any banking day.
Savings Account
provided by financial institutions, mostly banks
deposit instruments
banks are monitored by:
Bangko Sentral ng Pilipinas (BSP)
bank deposits are insured with:
Philippine Deposit Insurance Corporation (PDIC)
the insured amount is only up to ______ per depositor for every bank.
₱500,000
A comprehensive rating system
CAMELS
CAMELS
Capital adequacy, Asset quality, Management indicators, Earnings quality, Liquidity, and Sensitivity to risk factors.
Rating Range CAMELS
1 as the highest and 5 as the lowest rating
fall under the category of debt securities and most of them are also classified as fixed income instruments.
government securities
government securities list
Treasury Bills (T-bills) Treasury Notes (T-notes) and Treasury Bonds (T-bonds)
They have maturities of one year or less.
Treasury Bills (T-bills)
There are three major types of Treasury bills—91-day, 182-day, and 364-day T-bills.
Treasury Bills (T-bills)
They are considered discount securities because they are issued at a discount relative to their face value.
Treasury Bills (T-bills)
Investors earn from the difference between the face value and the discounted price they paid for upon purchase of the instrument.
Treasury Bills (T-bills)
T-notes and bonds have maturities longer than one year which could be from two to 25 years.
Treasury Notes (T-notes) and Treasury Bonds (T-bonds)
T-notes and bonds pay coupon interest at regular intervals. Fixed rate T-notes, for example, pay coupon interest every semi-annual period. Retail T-bonds denominate every ₱5,000 pay coupon interest quarterly.
Treasury Notes (T-notes) and Treasury Bonds (T-bonds)
The principal is repaid upon maturity of the instrument.
Treasury Notes (T-notes) and Treasury Bonds (T-bonds)
addtnl info
There are other government securities issued by government agencies aside from the Bureau of Treasury such as bonds issued by local government units (LGUs). The primary difference is that these bonds are not backed unconditionally and are not direct and general obligations of the National Government. Because of this difference, a higher rate of return is required compared to Treasury securities.