PBO2 QUIZ 2 - PH Financial System

Question 1

is a network of financial institutions, such as banks, insurance companies, and stock exchanges, that permit the exchange of funds.

To allocate or match the supply of savings in the economy to the users of those savings in a safe and efficient manner.

Answer 1

financial system

Question 2

Elements of a Financial System

Answer 2

FI- 1. Financial Institution
FM- 2. Financial Market
FI- 3. Financial Instruments
FC- 4. Financial Claims
FS- 5. Financial Services
FP- 6. Financial Practice
FT- 7. Financial Transactions

Question 3

These are organizations that offer financial services which can be a private or a government organization.

These may include financial intermediaries acting as middlemen

Answer 3

1. Financial Institution

Question 4

A mechanism that allows people to buy and sell financial securities, including stocks and bonds, commodities.

This includes the Philippine Stock Exchange and other similar groups dealing with money market operations.

Answer 4

2. Financial Market

Question 5

These are assets belonging to a person or company. This can include cash, bonds, or other assets, such as property or items of value.

Answer 5

3. Financial Instruments

Question 6

These include the rights to receive money based on financial instruments presented.

These instruments serve as evidence for claims either a debt claim or equity claims.

Answer 6

4. Financial Claims

Question 7

These are offered by financial institutions. These include such things as banking, insurance policies, loans and mortgages, as well as pensions.

Answer 7

5. Financial Services

Question 8

Types of Financial Markets

Answer 8

c- 1. Capital Markets
M- 2. Money Markets
C- 3. Commodity Markets
F- 4. Foreign Exchange Markets

Question 9

A representation of partial ownership in a company and is the type of stock most people buy.

can change over time or even be discontinued.

comes with voting rights, as well as the possibility of dividends and capital appreciation

Answer 9

Common Stock

Question 10

A class of stock with preferences over common shares-higher claim on assets and earnings than common stock has including distribution of dividends and corporate assets upon dissolution of the corporation.

has a fixed, guaranteed dividend

Answer 10

Preferred Stock

Question 11

include the direct selling of new bonds to investors by issuers. New bonds are issued in primary bond markets. New bonds are also referred to as ‘new issue markets.

Answer 11

Primary Markets

Question 12

Instruments Traded in the Money Market

Answer 12

T- 1. Treasury Bills
C- 2. Commercial PapeR
C- 3. Certificate of Deposit
R- 3. Repurchase Agreements

Question 13

are sold at a discount to their face value, and the difference between the discounted purchase price and face value represents the interest rate.

Answer 13

1. Treasury Bills

Question 14

Unsecured loan issued by large institutions to finance short-term cash flow needs such as inventory and accounts payables.

It is issued at a discount, with the difference between the price and face value of the ____________ being the profit to the investor.

Answer 14

2. Commercial Paper

Question 15

Issued directly by a commercial bank, but it can be purchased through brokerage firms.

It comes with a maturity date ranging from three months to five years and can be issued in any denomination.

Answer 15

3. Certificate of Deposit

Question 16

Short-term form of borrowing that involves selling a security with an agreement to repurchase it at a higher price at a later date.

Answer 16

4. Repurchase Agreements

Question 17

is a marketplace for buying, selling and trading raw materials or primary products

Answer 17

• Commodity Market

Question 18

include natural resources that must be mined or extracted, such as gold, rubber, and oil

Answer 18

Hard commodities

Question 19

are agricultural products or livestock, such as corn, wheat, coffee, sugar, soybeans, and pork.

Answer 19

Soft commodities

Question 20

Commodities have two general pricing forms

Answer 20

1. spot prices in the physical markets and;
2. futures prices for later delivery

Question 21

in the physical markets
-Trade many commodities

Answer 21

1. spot prices (General)

Question 22

for later delivery
-Trade only one commodity

Answer 22

futures prices (Specialized)

Question 23

2 Parts of BANKO SENTRAL NG PILIPINAS

Answer 23

1. Banking Institution
2. Non-Bank Financial Institution

Question 24

2 Parts of Banking Institution

Answer 24

a. Private
I. Commercial Banks
II. Rural Banks
III. Thrift Banks

b. Government
I. Development Bank of the PH (DBP)
II. Philippine Veterans Bank (PVB)
III. Land Bank of the Philippines

Question 25

2. Non-Bank Financial Institution

Answer 25

a. Private b. Government I. GSIS II. SSS

Question 26

was created by Republic Act No. 7653, otherwise known as the New Central Bank Act of 1993. The bank began formal operation on July 3, 1993. is now the Philippines' central monetary authority that provides policy directions in the areas of money, banking and credit. its functions are exercised by its Monetary Board, consisting of seven members appointed by the President of the Philippines (Governor is the CEO)

Answer 26

Bangko Sentral ng Pilipinas (BSP)

Question 27

BSP's functions are exercised by its Monetary Board, consisting of ________ members appointed by the President of the Philippines (Governor is the CEO)

Answer 27

Seven(7)

Question 28

The Bangko Sentral ng Pilipinas (BSP) began formal operation on ___________

Answer 28

July 3, 1993

Question 29

Functions of the Banko Sentral ng Pilipinas (BSP)

Answer 29

S- 1. Supplier of Money M- 2. Money Manager B- 3. Bank of All Banks M- 4. Main Bank of the Gov't

Question 30

BSP is the only one of the financial institutions who has the rights to produce, print out paper bills and mint coins. This is enacted to ensure the uniformity in design and content of money, for the people to prevent the circulation of a counterfeit/fake money.

Answer 30

1. Supplier of Money

Question 31

The BSP manages the amount of money available to the public to keep prices from increasing more than usual in preservation of the value of money and earnings, and savings are not eroded by abnormal increases. BSP does not easily print out money, they need to know first the state of our economy.

Answer 31

2. Money Manager

Question 32

Banks are required to have funds reserved to BSP to protect its creditors. The BSP grants loans to and accepts deposits only from banks. It lends cash to banks in times of national or local emergencies or when stability of banks is at risk. BSP regularly monitors and examines the operations of banks as part of its role to supervise all registered banks in the country.

Answer 32

3. Bank of All Banks

Question 33

The BSP is the official depository of the government. Some of the tax collections, proceeds of the sale of government securities and foreign loans are deposited with BSP. Likewise, when the government needs to repay its foreign debts or disburse money to pay expenses, it withdraws funds from BSP.

Answer 33

4. Main Bank of the Gov't

Question 34

Covers the widest range of functions among all financial intermediaries. Their services include receiving, collecting, transferring, paying, lending, investing, dealing, exchanging and handling money, safe deposit, custodianship, agency and money claims domestically and internationally.

Answer 34

1. Commercial Banks

Question 35

Regional banks operate primarily to serve the needs of the people in the provinces and sub-urban areas. It fulfils the investment function by allowing small farmers to finance their needs through the granting of loans for capital or other uses.

Answer 35

2. Rural Banks

Question 36

Are savings and mortgage banks, stock savings and loan associations, and private development banks. They grant loans, invest in readily marketable bonds and other debt securities, but they cannot engage in international banking operations.

Answer 36

3. Thrift Banks

Question 37

Tasked with the development and expansion of the agricultural industry and promoting the establishment of private development banks. Its lending activities are concentrated on the development projects such as agriculture, industry and low cost-housing

Answer 37

1. Development Bank of the Philippines

Question 38

Provide timely and adequate financial support to the Agrarian Reform Program. Its lending activities are geared primarily towards helping farmers acquire land under the agrarian reform program, as well as finance the cultivation of these lands and marketing of the produce.

Answer 38

2. Land Bank of the Philippines

Question 39

A medium sized commercial bank owned by the Philippine World War II veterans and their families and caters to both corporate and retail financial markets. As part of its charter, it allocates 20% of its annual net income for the benefit of its shareholders.

Answer 39

3. Philippine Veterans Bank

Question 40

Private Non-Bank Institution

Answer 40

I- 1. Investment Houses I- 2. Investment Companies F- 3. Financing Companies S- 4. Security Dealers/Brokers P- 5. Pawnshop T- 6. Trust Corporations I- 7. Insurance Companies F- 8. Fund Managers L- 9. Lending Investors

Question 41

Companies engage in the underwriting of securities of other corporations

Answer 41

1. Investment Houses

Question 42

Financial institutions that raise funds in the capital market by selling their own securities

Answer 42

2. Investment Companies

Question 43

Extend credit facilities to consumers and to industrial, commercial, or agricultural enterprise

Answer 43

3. Financing Companies

Question 44

Intermediaries in the marketing process, as brokers, as dealers or as underwriters

Answer 44

4. Security Dealers/Brokers

Question 45

Lends money on personal property delivered as security for loan

Answer 45

5. Pawnshop

Question 46

Act as trustee or administrator of any property or trust, and deposit

Answer 46

6. Trust Corporations

Question 47

Provide mechanism for distributing equitably losses among a large number of persons who are subject to a particular risk

Answer 47

7. Insurance Companies

Question 48

Performs quasi-banking functions engaged in the administration and management of property or money

Answer 48

8. Fund Managers

Question 49

Receive funds from one group of persons and make available or lend these funds to another person or entity who cannot borrow from banking institutions

Answer 49

9. Lending Investors

Question 50

Grants to its members, those from the private sector, benefits such as sickness, disability, death and old- age pension. Additional benefits have been incorporated into the including hospitalization benefits, employees' compensation benefits and maternity benefits.

Answer 50

1. SOCIAL SECURITY SYSTEM (SSS)

Question 51

Issues Affecting Financial INSTITUTIONS

Answer 51

R- 1. Regulatory Compliance S- 2. Security Breaches C- 3. Customer Expectations D- 4. Disruptive Technologies I- 5. Increasing Competition E- 6. Economic Instability

Question 52

The ever-changing regulatory environment poses a constant challenge for financial institutions of all types

Answer 52

1. Regulatory Compliance

Question 53

Battling fraud, data breaches, and other cybersecurity threats feels more daunting as each year goes by

Answer 53

2. Security Breaches

Question 54

Changing customer expectations reinforce the impact of service quality, highlighting the influence of technology.

Answer 54

3. Customer Expectations

Question 55

Disruptive technologies can reshape entire industries, including finance. (Le blockchain technology)

Answer 55

4. Disruptive Technologies

Question 56

The banking industry is facing increasing competition from new digital players

Answer 56

5. Increasing Competition

Question 57

It can lead to increased credit risk and reduced profitability

Answer 57

6. Economic Instability

Question 58

refers to a condition of low and stable inflation. By keeping price stable, the BSP helps ensure strong and sustainable economic growth and better living standards.

Answer 58

Price stability

Question 59

The BSP's main responsibility is to formulate and implement policy in the areas of money, banking and credit with the primary goal of preserving price stability. The primary objective of the BSP's ___________ is to promote a low and stable inflation conducive to a balanced and sustainable economic growth.

Answer 59

Monetary Policy

Question 60

was launched in February 2022. It replaces the quarterly publication of the Inflation Report and serves as the flagship BSP publication on monetary policy. provides the public a detailed view of the BSP's forecasts as well as guidance on the likely direction of monetary policy over the near term.

Answer 60

Monetary Policy Report (MPR)