FM Exam

Question 1

A Financial Institution that accepts deposits, offers checking account services, makes various loans and offers basic financial products like certificate of deposits (CDs) and savings accounts to individual and small businesses.

Answer 1

Commercial Banks

Question 2

Are cooperative associations whose members have a common bond, It is a not-for-profit financial institution that accepts deposits, makes loans and provides a wide array of other financial services and products

Answer 2

Credit Union

Question 3

Is a Financial Vehicle that pools assets from shareholders to invest in securities like stocks, bonds, money market instruments and other assets, They are operated by professional money managers , who allocate the fund’s assets and attempt to produce capital gains or income for the fund’s investors

Answer 3

Mutual Funds

Question 4

Are retirement plans that accumulates capital to be paid out which is managed by corporations or government agencies

Answer 4

Pension Fund

Question 5

Bring together people and organizations needing money with those having surplus funds, these are any location or system that enables traders of financial instruments, such as derivatives, bonds, shares, different global currencies to transact

Answer 5

FINANCIAL MARKET

Question 6

Is a type of risk that cannot be eliminated through diversification

Answer 6

Non-diversifiable Risk

Question 7

The value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today

Answer 7

FUTURE VALUE

Question 8

Monetary charge for borrowing money generally expressed as a percentage, such as an annual percentage rate

Answer 8

INTEREST

Question 9

Series of periodic payments or receipts usually made in equal amounts.

Answer 9

ANNUITY

Question 10

The term which means that the money available at the present time is worth more than the same amount in the future due to its potential earning capacity

Answer 10

TIME VALUE OF MONEY

Question 11

Is a long term contract under which a borrower agrees to make payments of interest and principal, on specific dates to its holders

Answer 11

BOND

Question 12

It is sometimes referred to as government bonds

Answer 12

TREASURY BOND

Question 13

This refers to the annual interest payment divided by the bond’s current price

Answer 13

CURRENT YIELD

Question 14

The interest rate that would exist on a riskless security if no inflation were expected, and it may be thought of as the rate of interest on short-term treasury securities in an inflation-free world

Answer 14

Wla pa ko kabalo

Question 15

Is a letter-based credit scoring schem used to judge the quality and credit-worthiness of a bond

Answer 15

BOND RATING

Question 16

any form of additional compensation that is required to encourage investment in assets that cannot be easily and efficiently converted into cash at fair market value

Answer 16

LIQUIDITY PREMIUM

Question 17

The risk of an income decline due to a drop in interest rates

Answer 17

INTEREST RATE RISK

Question 18

Is a special segment of banking operation that helps individuals or organizations raise capital and provide financial consultancy services to them

Answer 18

INVESTMENT BANKING

Question 19

Is a supply of capital belonging to numerous investors used to collectively purchase securities while each investor retains ownership and control of his own shares

Answer 19

INVESTMENT FUND

Question 20

Is a kind of mutual fund that invests in highly liquid, near-term instruments

Answer 20

MONEY MARKET FUND

Question 21

can be eliminated
by holding assets the returns of
which are not perfectly correlated

Answer 21

DIVERSIFIABLE RISK