financial markets Flashcards
it refer broadly to any
marketplace where the trading
securities occurs,including the stock
market,bond market,forex market,and
derivatives market,among
others
financial markets
these are the meeting place for people, corporations and institutions. Either to borrow or lend or invest money.
financial markets
Types of Financial Markets
primary markets
secondary markets
organized markets
otc
new shares are issued and sold to the investing public for the first time. It is where capital is actually raised by the company selling stock directly to investors typically through an initial public offering.
primary markets
it is where securities can be bought and sold after they have been issued to the public in the primary market
secondary market
Centralized platforms where the buying and selling of securities occur under regulated conditions, ensuring transparency and fair price discovery.
organized markets
This market is not a specific organization but another way of trading
securities. this are carried out by direct inquiries and
negotiations among the buyers and sellers through the use of mail,
telephone, telegraph, Teletype, or other forms of communications.
otc
is a debt instrument
that can be bought or sold between
two parties and has basic terms
defined, such as the amount borrowed,
interest rate, and maturity and renewal
date.
debt securities
represent ownership
interest in a corporation. Shareholders
earn a claim on the company’s assets
and profits, typically through dividends
or capital gains.
equity securities
it is the largest
and most liquid financial market in the world. It involves the trading of
currencies from different countries.
forex markets
are financial contracts whose value is derived from an underlying
asset, such as currencies, stocks, bonds, or commodities. These instruments are
used for hedging risks, speculating on price movements, and gaining access to
specific markets.
derivatives
is a marketplace for debt securities. This market covers both government-issued and corporate-issued debt securities.
bond market
refers to how the market for bonds is organized and how bonds are bought and sold.
bond market structure
Bond market participants
issuer
investors
dealers and brokers
underwriter
Types of bonds in the market
government bonds
municipal bonds
corporate bonds
high-yield bonds
is the percentage charged by a lender to a borrower for the use of money, typically expressed as an annual percentage of the principal. It also represents the return earned on investments or savings.
interest rates
is the face value of the bond. Bond is a fixed-income financial instrument that represents a loan made by an investor to a borrower.
bond price
Types of Interest Rates Risk
price risk
reinvestment risk
cash flow risk
This kind of risk develops when a shareholder reinvests the earnings from a financial product, like a bond or a certificate of deposit, at a lower interest rate.
reinvestment risk
is defined as the public markets (or collective
trading networks) that exist for issuing, buying, and selling stocks
that trade on a stock exchange or over-the-counter.
stock market
A market for converting the currency of one country to another country.
foreign exchange market
Participants of Forex
market
central banks
commercial banks
traditional users
foreign exchange brokers
is the price at which one currency can be exchanged for another currency in the foreign exchange markets.
FOREIGN EXCHANGE RATE
is that market which handles only spot transaction or current transactions.
spot market or current market
is that market which handles such transaction of foreign exchange as are meant for future delivery.
forward markets
Purchasing power parity
theory types
-ABSOLUTE PURCHASING
POWER PARITY
-RELATIVE PURCHASING
POWER PARITY
it states that once two currencies have been exchanged, a basket of goods should have the same value.
absolute ppp
is an economic theory that
explains the relationship between exchange rates and inflation rates
between two countries over time.
relative ppp
The Simultaneous purchase and
sale of the same asset in different
markets in order to profit from
tiny differences in the assets
listed price.
arbitrage
TYPES OF ARBITRAGE
spatial arbitrage
triangular arbitrage
covered interest arbitrage
Establishes the fundamental rules
guiding the activities of banking
institutions in the Philippines. It
addresses critical aspects such as
risk management, capital adequacy,
and governance.
RA 8791
Issued in 2022 to protect consumers in
the Philippines’ financial markets.
RA 11765
Enacted in 2001, it combats money
laundering activities that enable
criminal activities to continue.
RA 9160
Mandates that all legally operating
banks must have deposit insurance
coverage with the PDIC.
RA 3591
This law ensures the security and
reliability of online transactions in
which businesses and financial
institutions actively participate.
RA 8792
This law requires you to obtain
consent before getting and
processing customer data. It also
imposes strict requirements for
secure data storage and handling
procedures.
RA 10173
Type of bank which participates in many kinds of banking activities and is both a commercial bank and an investment bank as well as providing other financial services such as insurance.
universal bank
Type of financial institution that handles
transactions such as making deposits,
availing of checking account services, and
getting loans for individuals and
businesses.
commercial bank
regulated financial institutions that specialize in
accepting savings deposits and providing
mortgage loans to individuals and small
businesses
thrift banks
Traditional banks that serve farmers,
fishermen, workers or communities
away from the highly-dense
metropolitan cities in a country.
rural banks
One which is organized, owned and
controlled by cooperative organizations,
for the purpose of providing financial
and credit services to cooperatives and
their members.
cooperative banks
banks that operate in accordance with
Islamic law, or Shariah
islamic banks
It allows customers to access their bank
accounts and perform transactions using
a computer or mobile device
digital banking
