REVIEWER 🤬 Flashcards
financial institution that accept deposits or offer loans
banks
offers bank-like services but cannot accept deposits due to absence of banking license
non-bank institution
offer transfer of risk transactions, cover the loss of the business
insurance companies
industry of buying and selling currencies
currency exchange
lending companies that offer small credits
microloan organization
institution that offer quick cash loans “sanla”
pawnshop
can be used in different purposes and whether those funds are used for short/long term
business loans in banks
provide loans but have lighter bank requirements, may offer flexible amount to be loan
business loans in non banking institution
details of personal data, income sources and credibility
application form
presented to support credibility of the entity
financial statements
client record of bank transactions
bank statements
overall legality of the business organization
certificate of business registration
presented in business proposal form
company profile
land title, tax declaration, vicinity map
collateral documents
offered submitted to and held by a custodian
credit information
determine the credit standing of the applicant
credit investigation
important in planning to forecast the outcome of the organization in future periods
projected financial statement
it is a concept that money you have now is worth more than the identical sum in the future
time value of money
it is the original amount borrowed
present value
it is the principal plus the total interest earned over a stated period
future value
it is the amount of money paid for the use of borrowed money
interest
it is computed based on the principal amount (original) and based on the annual time
simple interest
simple interest formula
I = Prt
it is an interest earned is added to the principal and the new principal draws interest
compound interest
formula of compound interest
FV = P (I+r) ^t
number of times an interest is computed on a certain principal in one year
compounding frequency
it is the sum of money borrowed that is expected to be paid back with interest
loan
paying the debt with regular payments
amortization
it is an example of an amortizing loan that requires the borrow to pay
housing loan
form of loan that can be traded in through the Philippine Dealing and Exchange (PDEX) system
bond
it is a series of payments required for a specific number of periods
annuity
payments are due at the beginning of each payment perior
annuity due
payment appears at the end of each period
ordinary annuity
it is a process that a business uses in evaluating and selecting major projects or investment
capital budgeting
it is a long term investment
capital expenditures
all levels within the organization are encouraged to make suggestions for capital expenditures
investment proposal
the financial personnels review and analyze the benefits and costs that may be derived from the proposal
review and analysis of the proposal
these are projects that do not compete with other projects
independent projects
these are the projects that compete with other projects, the approval of the one eliminate the other project
mutually exclusive projects
the business with _______ will choose a project with the best opportunities
capital rationing
if the business has _______ it will accept all the projects that pass the risk return criteria
unlimited funds
net cash inflows one expects to get when the business/project had already started
cash returns
evaluates a project by measuring the time it will take to recover the initial investment
payback method
when cash returns are ______, the payback period is computed by adding the cash returns until the total is equal to the investment
uneven cash returns
it is the difference between the present value of cash inflows and the net present value of cash outflows over a period
net present value
it is the most used technique in capital budgeting where it was defined as the discount rate that makes the net present value of an investment equals to zero
internal rate return (IRR)
it is efficient and effective way to use personal or business funds
investing
it can be considered as funds that can either multiply or incure a loss
investment
uncertainties or chances that the outcomes of investments are different from what is expected
investment risk
uncertainty due to economic development or factors that affect the market
market risk
chance that an investor is unable to sell an investment due to change in price
liquidity risk
concentration of loss that can be incurred due to lack of diversification
concentration risk
risk that money investment in a government bond may be uncollectible
credit risk
risk of loss from shifting from one investment to another
reinvestment risk
risk that an investment may not be able to sustain to purchasing power
inflation risk
risk that an investment may be stepped or pulled out due to unforeseen events
horizon risk
a person will live too long and may outline his/her investments
longevity risk
individual market risks that may affect investment from different countries
foreign investment risk
expected profits to receive from an investment
investment returns
an investment will yield a higher return only if the investor accepts a higher risk or possibility of losses
risk return trade off
primarily driven by the availability of resources while balancing the advantages and disadvantages of investment opportunities
risk tolerance
characteristics of an investor whose willingness in accepting risk is very low
conservative risk tolerance
an investor is willing to put average resources and accept some risks
moderate risk tolerance
investor is willing to put more resources, accept maximum risks on a high quality investment
aggressive risk tolerance
planning of investment opportunities based on the risk tolerance of an investor
portfolio management
investors has stagnant or excess of resources, they engage in different investing activities to gain profits
investment diversification
