FUNDAMENTAL OF FINANCE AND FINANCIAL MANAGEMENT Flashcards
Finance as a verb would mean
“to provide funding”
financial management covers the ff:
> Planning
Organizing
Leading
Controlling
It involves the actual handling of an organization’s funds, which covers operational, investments, and financial decision
Financial Management
2 Branches of Finance
Public Finance and Private Finance
covers management of public funds, national budget, and tools for fiscal policy such as government expenditure and taxation.
Public Finance
it is everything encompasses personal financial planning (budget)
Personal Finance
management of all the financial activities of an enterprise or a business organization
Corporate Finance (Business Finance)
-it provides the financial data that help internal users in making future-oriented decisions.
Managerial Accounting
keeps track of all the historical transactions of a business that will be used in preparing reports intended for use by external parties such as government agencies, investors and creditors.
Financial Accounting
involved in planning, contribute in identifying goals and objectives, setting targets, and establishing control measures in order to monitor performances.
Finance Manager
-generated by different departments.
-It is an effective communication tool across departments.
Financial Information
includes a detailed budget for different programs, is in some ways synonymous with measurable goal.
Overall Financial Plan
is an organization that handles financial transaction individuals, groups, and other organization – profit, nonprofit, private or government owned.
FINANCIAL INSTITUTIONS
financial institutions facilitate the flow of funds in the financial market through the buying and selling of financial securities.
FINANCIAL INSTITUTIONS
7 types of Financial Institutions
- Commercial Banks
- Savings and loan banks
- Credit unions
- Investment banks
- Insurance company
- Brokerage
- Investment companies
accept deposits from individuals and organizations that have excess funds and provide loans to those who want to borrow money.
Commercial Banks
a financial agreement between a borrower and a lender.
residential mortgage
are usually an offshoot of cooperatives.
Credit unions
they perform the task of an intermediary which facilitates the transactions of individuals and institutions in investing
Investment banks
provide individuals and organizations a way on how to manage risk.
Insurance company
a financial institutions that earns through commissions.
Brokerage
are corporations wherein individuals and other organizations invest in investment portfolios that are managed by professionals who keep track of market trends and the performance of different financial products or instruments.
Investment companies
it is a document that signifies a legal or binding agreement between two parties.
FINANCIAL INSTRUMENTS
7 COMMON FINANCIAL INSTRUMENTS
- Savings
- Loans
- Bonds
- Security
- Treasury bills
- Insurance products
- Mutual funds
The fund manager creates an online account for each investor. Each account is protected by a password and only the investor or his or her authorized representative has access to the account.
Mutual funds
is a loan granted to other organizations by individuals and organizations with excess funds.
bonds
is a means for the buying and selling of stocks, bonds, and other financial instruments.
FINANCIAL MARKETS
are, in essence, money loaned
Bonds
are shares of a corporation sold to investors
Stocks
a means where individuals and organizations who need funds find investors and lenders
financial market
2 classifications of financial market
Money market
Capital markets
transactions involving short –term debt securities take place. A short-term debt, is one that is due/ demandable within one year or less.
Money market
transactions involving long-term debt securities, or those maturing in more than one year, take place.
Capital markets
covers all new issues capital securities
->Primary market
covers trade of previously issues securities
->Secondary market
4 ROLE OF FINANCIAL INTERMEDIARIES MARKETS
Reduce costs, Diversification, Pooling of Funds, and Financial flexibility
individuals, households, organizations and government agencies with surplus or excess money.
Suppliers of Funds
individuals, households, organizations and government agencies who are in need of money for a variety of reasons- for personal use, to support family need, for expansion, and to support public programs or infrastructure projects, among others
Demanders of Funds
