Module 2

Question 1

SAVERS

Answer 1

Households
-Individuals
-Corporations/Companies -Government Agencies

Question 2

Financial Intermediaries

Answer 2

-Banks
-Insurance Companies
-Stock Exchange
-Stock brokerage firms
-Mutual Funds

Question 3

Users of Funds (Borrowers/Investors)

Answer 3

-Households
-Individuals
-Corporations/Companies -Government Agencies

Question 4

links the savers and the users of funds.

Answer 4

financial system

Question 5

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

Answer 5

Financial institutions

Question 6

which use the deposited funds to provide commercial loans to firms and personal loans to individuals,

Answer 6

Commercial Banks

Question 7

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

Answer 7

Insurance Companies

Question 8

examples of financial institutions/Intermediaries

Answer 8

Commercial banks
Insurance banks
Mutual funds
Pension Funds

Question 9

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.

Answer 9

Mutual funds

Question 10

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

Answer 10

Pension Funds

Question 11

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

Answer 11

Financial Instruments

Question 12

is any asset that is:
• Cash

Answer 12

Financial Asset

Question 13

is any liability that is a contractual obligation:

Answer 13

Financial Liability

Question 14

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

Answer 14

Equity Instrument

Question 15

generally have fixed returns due to fixed interest rates.

Answer 15

Debt Instruments

Question 16

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.

Answer 16

Treasury bonds and treasury bills

Question 17

Financial instruments

Answer 17

Financial asset
Financial liability
Equity Instrument
Debt Instruments

Question 18

issued by publicly listed companies.

Answer 18

Corporate Bonds

Question 19

generally have varied returns based on the performance of the issuing company.

Answer 19

Equity Instruments

Question 20

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

Answer 20

Preferred Stock

Question 21

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

Answer 21

Holders of Common Stock

Question 22

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

Answer 22

Financial Market

Question 23

. To raise money, users of funds will go to a primary market to issue new securities (either debt or equity) through a public offering or a private placement.

Answer 23

Primary vs. Secondary Markets

Question 24

sale of new securities to the public referred to as a public offering and the first offering of stock named an

Answer 24

initial public offering.

Question 25

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

Answer 25

private placement.

Question 26

The sale of previously owned securities takes place in

Answer 26

secondary markets.

Question 27

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

Answer 27

Money markets

Question 28

are bonds (long-term debt) and both common stock and preferred stock (equity, or ownership).

Answer 28

capital market securities