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101BF > Lesson 3: Financial Institutions, Instruments, and Markets > Flashcards

Lesson 3: Financial Institutions, Instruments, and Markets Flashcards

1
Q

links the savers and the users of funds

A

financial system

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2
Q

entity whose cash inflows are greater than their cash outflows

A

savers/suppliers of funds

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3
Q

examples of savers/suppliers of funds

A

households, individuals, corporate/companies, government agencies

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4
Q

examples of financial intermediaries

A

banks, insurance companies, stock exchange, stock brokerage firms, mutual funds

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5
Q

examples of users/borrows/investors of funds

A

households, individuals, corporate companies, government agencies

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6
Q

companies in the financial sector that provide a
broad range of business and services including banking, insurance, and
investment management

A

financial institutions

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7
Q

what services are provided by financial institutions

A

banking, insurance, and investment management

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8
Q

examples of financial institutions

A

commercial banks, insurance companies, mutual funds, pension funds

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9
Q

how do commercial banks work

A

individuals deposit funds, and the bank uses those deposited funds to provide commercial loans and purchase debt securities

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10
Q

Individuals purchase insurance (life, property
and casualty, and health) protection with

A

insurance premiums

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11
Q

what do insurance companies do with the money they earned with insurance premiums

A

invest in various securities to pay off claims by policy holders

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12
Q

insurance companies often own

A

large blocks of a firm’s stocks or bonds and help them improve to also improve the performance of the securities they own

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13
Q

owned by investment companies that
enable small investors to enjoy the benefits of investing in a diversified portfolio of
securities purchased on their behalf by professional investment managers.

A

mutual funds

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14
Q

Financial institutions that receive payments from
employees and invest the proceeds on their behalf.

A

pension funds

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15
Q

examples of pension unds

A

GSIS, SSS, UITF, investment banks, credit unions

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16
Q

GSIS stands for

A

government service insurance system

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17
Q

SSS stands for

A

social security system

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18
Q

UITF stands for

A

unit investment trust fund

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19
Q

real or a virtual document representing a legal
agreement involving some sort of monetary value.

A

financial instruments

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20
Q

when a financial instrument is issued

A

it gives rise to a financial asset on one hand and a financial liability/equity instrument on the other

21
Q

a financial asset is any asset that is

A

cash, equity instrument of another entity, contractual right to receive cash or another financial asset from another entity; contractual right to exchange instruments with another entity under conditions that are potentially favorable

22
Q

examples of financial assets

A

notes receivable, loans receivable, investment in stocks, investment in bonds

23
Q

any liability that is a contractual obligation

A

financial liability

24
Q

financial liability includes

A

deliver cash or other financial instruments to another entity; exchange financial instruments with another entity under conditions that are potentially unfavorable

25
Q

examples of financial liability

A

notes payable, loans payable, bonds payable,

26
Q

any contract that evidences a residual interest in the
assets of an entity after deducting all liabilities.

A

equity instrument

27
Q

examples of equity instruments

A

ordinary share capital and preference share capital

28
Q

debt instruments generally have

A

fixed returns due to fixed interest rates

29
Q

examples of debt instruments

A

treasury bonds, treasury bills, and corporate bonds

30
Q

difference between treasury bonds/bills and corporate bonds

A

treasury bonds and bills are issued by the philippine government; corporate bonds are issued by publicly listed companies

31
Q

These bonds and bills have usually low interest rates and have very
low risk of default since the government assures that these has been paid.

A

treasury bonds and bills

32
Q

difference between treasury bills and bonds

A

treasury bills are short-term; treasury bonds are long-term

33
Q

equity instruments generally have

A

varied returns based on the performance of the company

34
Q

returns from equity instruments come from

A

dividends or stock price appreciation

35
Q

types of equity instruments

A

preferred stock and common stock

36
Q

has priority over a common stock in terms of claims over
the assets of a company.

A

preferred stock

37
Q

on the other hand are the real owners of the
company.

A

common stock

38
Q

refers to a marketplace, where creation and trading of
financial assets, such as shares, debentures, bonds, derivatives, currencies, etc.
take place

A

financial market

39
Q

types of markets

A

primary and secondary market

40
Q

PSE stands for

A

philippine stock exchange

41
Q

a place to issue NEW securities (either debt or equity) through a
public offering or a private placement.

A

primary market

42
Q

The sale of previously owned
securities takes place in

A

secondary market

43
Q

The sale of new securities to the public

A

public offering

44
Q

the first offering of stock

A

initial public offering

45
Q

sale of new
securities to one investor or a group of investors (institutional investors) is
referred to as

A

private placement

46
Q

the PSE is a

A

primary and secondary market

47
Q

a venue wherein
securities with short-term maturities (1 year or less) are sold.

A

money markets

48
Q

securities with longer-term maturities sold in

A

capital markets

101BF (12 decks)

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