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M1 Flashcards

1
Q

What is the ‘science and art of managing money’?

A

Finance

Source: Gitman and Zutter, 2012

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2
Q

Refers to the use, allocation, and sourcing of funds of the organization

A

Financial Management

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3
Q

What is the act of estimating revenues and expenses over time?

A

Budgeting

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4
Q

What is the act of looking for opportunities to place excess cash?

A

Investing

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5
Q

What is the act of looking for sources of funds when the organization lacks cash?

A

Financing

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6
Q

What branch of finance pertains to personal financial planning?

A

Personal Finance

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7
Q

What branch of finance deals with tax collection and budget allocation for public programs?

A

Public Finance

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8
Q

What branch of finance deals with the management of all the financial activities of an enterprise or a business organization?

A

Corporate Finance

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9
Q

What is the focus of Corporate Finance?

A

Management of all financial activities of an enterprise aiming for wealth maximization.

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10
Q

What measures a corporation’s financial performance over time?

A

Profitability

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11
Q

What indicates having enough cash to pay off short-term obligations?

A

Good Liquidity

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12
Q

What refers to the efficient and effective use of assets and liabilities?

A

Reasonable Leverage Position

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13
Q

What allows investors to hope for better revenues due to concrete future prospects?

A

Corporate Plans that Improve Business

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14
Q

What characteristics define Competent Management?

A

Visionary, decisive, people-oriented, inspiring, innovative, respected, and experienced managers.

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15
Q

What type of decisions involve cash use in daily operations?

A

Operating

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16
Q

What type of decisions involve where to outsource additional funds?

A

Financing

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17
Q

What type of decisions involve when to pay out dividends to shareholders?

A

Dividend Policy

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18
Q

Refers to an organized forum that lets suppliers of funds meet with users of funds.

A

Financial Market

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19
Q

What serves as an intermediary between suppliers and users of funds?

A

Financial Institution

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20
Q

What are documents with monetary value signifying a legal or binding agreement between two parties?

A

Financial Instruments

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21
Q

This party holds financial instruments giving rise to financial assets.

A

Savers/suppliers of funds

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22
Q

This party issues financial instruments giving rise to financial liabilities.

A

Users/demanders of funds

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23
Q

These arise when savers hold financial instruments.

A

Financial Assets

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24
Q

These arise when users hold financial instruments.

A

Financial Liabilities

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25
This agreement is made if a saver of funds knows that a user needs it or vice-versa.
Private Placement
26
Savers and users go here if the need to borrow/invest funds is unknown.
Financial Market
27
Savers and users go here if both saver and user do not want to try to find their counterparts in the financial markets.
Financial Institution
28
What financial institution acts as an intermediary between depositors (savers of funds) and borrowers (users of funds)?
Bank
29
What factor is indicative of a bank's liquidity?
If it has enough cash to meet demands for payment.
30
What bank offers basic banking services such as savings and checking accounts, and loans?
Commercial Bank
31
What bank provides assistance on investments (e.g., asset management, investment advisory) in addition to commercial banking services?
Universal Bank
32
What type of bank offers savings and home mortgages?
Thrift Bank
33
Encourages economic growth and helps farmers and fishermen with capital needs.
Rural Bank
34
Conducts monetary policy and regulates banks nationwide.
Central Bank
35
What financial institution provides compensation coverage from losses, damages, and injuries?
Insurance Company
36
What type of insurance provides payments upon the death of the insured?
Life Insurance
37
What type of insurance covers financial losses due to damage of properties?
Non-life Insurance
38
What type of insurance renders future services when the actual need arises?
Pre-need Insurance
39
This is a combination of two or more other types of insurance.
Hybrid Insurance
40
What financial institution facilitates investments, legal and tax assistance, and record keeping for individuals and businesses?
Investment House
41
This person functions as a middleman between two parties in an investment transaction.
Broker
42
This is a pool of money from multiple investors used by professionals to invest in securities.
Mutual Fund
43
Investment in stocks; generally higher returns but with higher risk.
Equity Fund
44
Investment in corporate bonds; lower risk and lower returns.
Fixed Income Fund
45
Investment in a mix of equity and fixed income securities (depending on risk appetite).
Balanced Fund
46
Investment in securities that are generally not available to retail investors.
Feeder Fund
47
Investment in multiple mutual funds.
Fund of Funds
48
Investment that replicates the structure and performance of a financial market index (e.g. PSE Index, NYSE Index).
Index Fund
49
Investment in short-term securities issued by government and companies (e.g., treasury bills, commercial papers).
Money Market Fund
50
Section of the financial market that involves trading of financial instruments with high liquidity and short-term maturities.
Money Market
51
Issued by the government to gather short-term funds for its projects.
Treasury Bills
52
Issued by commercial banks for a fixed period to give a fixed amount of return.
Certificates of Deposit/Time Deposit
53
This is an unsecured loan issued by corporations to finance short-term cash flow needs.
Commercial Paper
54
Provides funding for mortgage lenders and financial institutions.
Short-term Mortgage-Backed Securities
55
This is a form of payment that is guaranteed by a bank rather than the account holder.
Banker’s Acceptance
56
Short-term agreements to sell securities with a right to repurchase them at a later date.
Repurchase Agreements
57
Section of the financial market that involves trading of long-term financial instruments.
Capital Market
58
Type of market where securities are created and sold for the first time.
Primary Market
59
Type of market where investors trade securities that have been previously issued.
Secondary Market
60
Debt instruments issued by businesses and government where interest is paid regularly.
Bonds
61
Equity instruments issued by corporations in exchange for a share of ownership.
Stocks
62
Cash payouts to stockholders in a corporation.
Dividends
63
Shares of company ownership that are paid first in dividends but do not have voting rights.
Preferred Stock
64
Shares of company ownership that are paid after preferred shares; holders have voting rights.
Common Stock
65
Markets that do not fall under traditional categories and involve investments outside major stock exchanges.
Alternative Markets
66
This involves buying, selling, and renting properties.
Real Estate
67
Financial contracts whose values depend on the underlying assets.
Financial Derivatives
68
This is a private, customizable derivative whose price is settled at the end of the agreement and traded directly (over the counter).
Forwards
69
This is a standardized derivative traded on an exchange (through an intermediary) whose prices are settled daily until the end of the contract.
Futures
70
These are rights to buy/sell an asset at a specific price at the contract expiration.
Options
71
These are agreements to exchange cash flows or liabilities from two different financial instruments with another party.
Swaps
72
Digital currency created using encryption algorithms.
Cryptocurrency
73
Global marketplace that determines the exchange rate for currencies.
Foreign Exchange
74
Digital assets secured by cryptography that can represent various items.
Non-Fungible Tokens (NFTs)

Business Finance (3 decks)

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