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Banking And Financial institutions > Prelim > Flashcards

Prelim Flashcards

1
Q

Set of markets, individuals, and institutions which trade in those markets and supervisory bodies responsible for the regulation

A

Financial System

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2
Q

A company engaged in business of dealing with financial and monetary transactions such as deposits, loans investments and currency exchange

A

Financial Institutions

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3
Q

An organization which funds from the lenders and lends them to the borrowers on terms which are better for both parties than if they dealt directly with each other

A

Financial intermediary

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4
Q

An organizational framework within which financial instruments can be both and sold

A

Financial markets

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5
Q

An organization where people and business can invest or borrow money change it to foreign currency etc

A

Bank

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6
Q

Types of intermediaries

A

Deposit-takers
Non-deposit taker

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7
Q

Two types of financial markets

A

Capital markets
Money markets

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8
Q

5 Basic principles of banking

A
  1. Principles of intermediation
  2. Principle of liquidity
  3. Principle of profitability
  4. Principle of solvency
  5. Principle of trust
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9
Q

Functions of banks

A

Traditional or core functions
Modern functions

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10
Q

Traditional functions of banks are

A

Accepting deposits
Lending
Funds remittance
Miscellaneous services

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11
Q

It is about providing an array of services to customers under one roof so as to enable banking with convenience

A

Modern Banking

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12
Q

It functions mainly comprises of activities such as cross-border banking, merchant banking, credit card, factoring, leasing and insurance and other financial services undertaken by the banks.

A

Modern commercial banking

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13
Q

Emerging trends in banking

A

Universal banking
Globalization of banking
Electronic banking

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14
Q

Characteristics and key functions of money

A

Store value
Item of worth
Means of exchange
Unit of account
Standard of deferred payment

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15
Q

It is vital for the economy’s essential banks, monetary policy which aim to stabilize price level and support economic growth

A

Supply and Demand for Money

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16
Q

It is a compensation paid by the borrower to the lender for the use of money as a percent or an amount the concept of this is the backbone behind most financial instruments in the world.

A

Interest

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17
Q

It is a concept that states an amount of money today is worth more than that same amount in the future in other words money received in the future is not worth as much as equal amount received today.

A

Time value of money

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18
Q

Formula on determining the interest rate

A

I = (p * r * t)

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19
Q

Also called coupon rate is the actual price borrowers paid lenders without accounting for any other economic factors

A

Nominal interest rate

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20
Q

Accounts for inflation giving a more precise reading of borrowers buying power after the position has been redeemed

A

Real interest rate

21
Q

Impact of changing interest rate

A

Higher interest rate
Lower interest rate

22
Q

Loans are less affordable
Encourages savings
Reduce disposable income
Slow down the economy

A

Higher interest rate

23
Q

Loans are more affordable Encourages spending
Increase disposable income Stimulates the economy

A

Lower interest rate

24
Q

It facilitates transactions in the economy

A

Money

25
Q

The mechanism for conducting such transactions in the economy that has evolved over time

A

Payment system

26
Q

Good use as a money that has value, independent of its use as money

A

Commodity money

27
Q

Money or such paper currency that has no value apart from its use as a money

A

Flat money

28
Q

Government accepts paper currency in payments for taxes and requires the individuals and forms accept it in payment of debts

A

Legal tender

29
Q

These are promises to pay on demand money if deposited with a bank or other financial institutions

A

Cheques

30
Q

Benefits of payment system

A

Security
Efficiency
Speed
Smooth international transaction Effective collaboration among participants in the system

31
Q

Transactions that reduce cost associated with processing checks reduce, likelihood of miss payments and reduce cost lender and care in notifying borrowers and miss payment

A

Automated clearing house

32
Q

Created to provide a convenience way to carry out the large transactions such as balance inquiry, withdrawals, transfers of bills etc

A

Automated teller machine

33
Q

information that describes the situation in which one party to an economic transactions as a better information that does the other part

A

Asymmetric information

34
Q

A cryptocurrency designed to act as money and a form of payment outside the control of any one person group or entity and those removing the need for third party involvement in financial transactions

A

Bitcoin

35
Q

A digital database or ledger that is distributed among the nodes of peer to peer network

A

Blockchain

36
Q

Demand for money

A

Transaction demand
Precautionary demand
Speculative demand

37
Q

Quantity theory of money

A

M * v = p * y

38
Q

It is any contract that give rise to a financial asset of one entity and a financial liability or equity instrument to other.

A

Financial instrument

39
Q

An agreement between two or more parties that has a clear economic consequences, that the parties have little, if any, discretion to avoid usually because agreement is enforceable by law

A

Contract

40
Q

It is any asset that includes cash equity instrument of another entity and receivable

A

Financial asset

41
Q

Types of financial instruments

A
  1. Primary instruments or cash instruments
  2. Derivative financial instruments
42
Q

This has financial assets financial abilities and equity instruments

A

Primary instruments or cash instrument

43
Q

It has financial option, futures, forwards, interest rates swaps and currency swap

A

Derivative financial instrument

44
Q

These are financial instrument that derive their value on contractually required cash flows from some other security or index

A

Derivatives

45
Q

Types of derivative financial instrument

A
  1. Future/ forwards
  2. Options
  3. Swaps
46
Q

The philippine financial system included of BSP

A
  1. Commercial bank
  2. Money service business
  3. Rural banks
  4. External sector
  5. Non-bank thrift institutions
  6. Private non bank financial institutions
  7. Government banks and specialized non bank financial institutions
47
Q

It is regulated the insurance commission

A

Insurance providers

48
Q

It is regulated by securities and exchange commission

A

Stock corporation

Banking And Financial institutions (1 decks)

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