FUNDAMENTALS OF FINANCIAL MARKETS Flashcards
They are the stock market, bond market, forex market, derivatives where buyers and sellers trade commodities financial securities (financial assets which are stocks, bonds, treasury bills) foreign exchange and other freely exchangeable (fungible-mutually interchangeable) and derivatives of value at low transaction costs and at prices that are determined by market forces.
TRADING SECURITIES
It refers broadly to any marketplace.
Financial Markets
They are the places wherein the financial instruments are being bought and sold by corporations, gov, individuals etc.
Financial Markets
It is a market where individuals, firms, banks, and the government push cash for a short period of time, it matures for 1 year or less.
money market
It is a market where the trade debt securities mature for 1 year or less.
money market
The instruments used are deposits, collateral, loans, acceptances, and bill of exchange and it is a short-lending system where there is less risk but low return.
money market
What are the types of commodities?
- Metal
- Energy
- Livestock
- Agricultural
They are the largest stock operator
NASDAQ
They are a pool of financial resources and invest in diversified portfolios. Wherein they are a pool of financial resources and invest in diversified portfolios.
mutual fund
They underwrite securities and engage in securities brokerage and trading.
securities firms and investment banks
They are depository institutions in the form of savings and loans, credit unions, and they focus on local people.
Thrift bank
It is the agreement between 2 parties to exchange a standard quantity of an asset at a predetermined price on a specified date in the future.
Derivative Security
What are the types of Financial Institutions?
- Commercial banks
- Thrifts
- Insurance companies
- Securities firms and investment banks
- Finance companies
- Mutual funds
- Pension funds
They are the traders and perform the essential function of channeling funds from those with surplus funds.
financial institution
They are depository institutions whose major assets are loans and major liabilities are deposits.
commercial bank
They protect individuals and corporations from adverse events.
insurance companies
They make loans to individuals and business
Central Bank of the Philippines, Citi
finance companies
It is where the financial instruments such as underlying assets and financial derivatives involve hedgers, speculators, arbitrageurs, and margin traders.
derivatives security markets
2 types of Forex
- Spot FX transaction - it involves the immediate exchange of currencies at the current exchange rate.
- Forward FX transaction - it involves the exchange of currencies at a specific date in the future and at a specified exchange rate.
It is the market in which the users of the funds such as the corporations and government raise funds by issuing financial instruments like stocks and bonds.
Primary market
It is where the borrowers of money obtain funds from lenders by selling or issuing financial instruments or securities such as stocks and bonds.
Primary market
These are the markets where people can buy and sell existing securities.
Secondary market
It is the market where financial instruments are traded among investors.
Secondary market
It is the market that deals in trading 1 currency for another (dollar for yen).
foreign exchange markets
It is also known as Forex, FX, currency market which determines the exchange rate for currencies.
foreign exchange markets
It is the market that trade bonds and equity securities such as stocks instruments with maturities of more than 1 year
capital market
What is the regulation of Financial Institutions?
Financial institutions provide vital financial services to all sectors of the economy.
Their regulation is in the public interest.
To prevent their failure and the failure of financial markets overall.
What are the risks faced by financial institutions?
- Interest rate risk (fluctuating)
- Foreign exchange
- Market risk
- Credit risk
- Liquidity risk
- Off-balance risk (based to grant loan)
- Technology risk
- Operational risk
- Country or sovereign risk
- Insolvency risk
They offer saving plans for retirement.
pension fund
