business finance 2 Flashcards
(35 cards)
the flow of money begins with blank who opens a bank account and earns interest from the account. in exchange, these funds are lent by the banks to businesses.
depositor
it serves as a link between the depositor who has the money and the lender who needs money.
financial intermediary
it include commercial banks, universal banks, investment companies, finance companies, life and non-life insurance companies, mutual fund companies, and private equity firms
financial institution
it is the process of managing financial matters including analysis of statements, assessment, or investment opportunities, which happens before one start investing and acquiring funds from different sources
financial management
who are the two key individual roles
the depositor who has the funds and the borrower who needs the funds
it is the person who has the money and puts in a savings account with a bank that pools this together with the savings from other depositors.
the depositor who has the funds
it is the one who needs funds and borrows it from a bank
the borrower who needs the funds
these are the tools that help a business’ daily operations and help the finance manager handles cash, short-term operating requirements, and long-term requirements
financial instruments
these are funds available for a short time. they are available most of the time and do not provide very high returns.
money market instruments
it is an example of long-term debt. it is a security reflecting the debts of a government’s or business’ debt promising to pay a fixed interest to the bondholder for a definite time,
bond
it is another example of long-term debt that has a longer term than a money market instrument. this are similar to bonds that have regular interest payments and have a specified maturity term
note
these are types of security that represent ownership in a corporation and a claim on part of the corporation’s assets and earnings
stocks
two main type of stocks
preferred and common stock
it is the meeting place of suppliers and users of various types of funds that can make transactions directly
financial market
it refers to financial market in which buyers and sellers negotiate and transact business directly without an intermediary
primary market
it is the sale of new securities to the general public and the first offering of stock is called IPO
public offering
it is the sale of a new security to a private or specific buyer
private placement
it refers to financial market where previously issued securities such as bonds, notes, and shares are boughth and sold
secondary market
it is a venue wherein securities with short-term maturities are borrowed or loaned.
Money markets
these are financial markets for stocks for a long-term period
capital market
these are deposit-taking financial institutions that extend credit to the consumer market that is in the countrside or rural areas
thrift banks
these are mainly deposit-taking financial institution that extend credit to the retail and consumer market, and their transactions are usually many but small, using the local currency
commercial banks
they collect and secure the funds of the depositor. they also lend the money of the depositors to small and medium businesses in exchange with interest to be paid regularly for the use of the funds
commercial banks
this financial institution lend money to multinational companies. the transactions are larger than commercial banks and denominated in multicurrencies not just to the local currency. they are like commercial banks but mostly their clients are larger corporations.
universal banks
