Chapter 1

Question 1

It refers to the whole gamut of market dealings with financial assets

Answer 1

Financial system

Question 2

It is where the lenders and borrowers of funds need to finance their needs and satisfy their objectives

Answer 2

Financial system

Question 3

Lenders and borrowers can be

Answer 3

Individuals businesses institutions and even the government

Question 4

This can be individuals businesses institutions and even the government

Answer 4

Lenders and borrowers

Question 5

They have available capital through savings and accumulated wealth and are willing to lend their capital for a fee

Answer 5

Lenders

Question 6

They are willing to pay a fee for the use of capital to support their financing means

Answer 6

Borrowers

Question 7

It brings together the borrowers and lenders of funds

Answer 7

Intermediation process

Question 8

It is the most common form of financial intermediation in the financial system

Answer 8

Banking system

Question 9

Lenders and borrowers in the financial system can be

Answer 9

Households firms government non-residents

Question 10

These are also part of the services provided by the financial intermediaries

Answer 10

Risk management liquidity and information dissemination

Question 11

Components of banking institutions

Answer 11

Universal banks
commercial banks
thrift banks
rural banks
specialized government banks

Question 12

Components of non bank financial intermediaries

Answer 12

Investment houses
financing companies
securities dealers or brokers
investment companies
insurance companies
lending investors
pawnshops
government non-bank financial institutions

Question 13

Components of non bank thrift institutions

Answer 13

Mutual building and loan associations
non-stock savings and loan

Question 14

It is responsible for implementing the monetary policy and regulation of the banking system

Answer 14

Bangko sentral ng pilipinas

Question 15

It supervises the operations of the insurance companies

Answer 15

Insurance commission

Question 16

It works with the bsp and ic in supervising and regulating the activities of the financial institutions in the country

Answer 16

Securities and exchange commission

Question 17

They are expanded commercial banks capitalized at 5 million or more

Answer 17

Universal banks

Question 18

They are banks with a minimum capitalization of 2.8 billion

Answer 18

Commercial banks

Question 19

They are banks with a minimum capitalization of 325 million for those whose head office is within metro manila and 25 million otherwise

Answer 19

thrift or savings bank

Question 20

They are normally operating and the sector with minimum capitalization of 3.2 million for those in the fifth and sixth class municipality is but those in metro manila need a minimum capitalization of 32 million

Answer 20

Rural banks

Question 21

These are government owned and controlled corporations engage and specialized lending program for economic development

Answer 21

Specialized government banks

Question 22

They are involved in underwriting of securities financial consultancy among others and have a minimum capital requirement of 300 million

Answer 22

Investment houses

Question 23

they lend to business firms and individuals using equity capital and long-term borrowed funds with minimum capital ranging from 2.5 million to 10 million depending on domicile

Answer 23

Financing companies

Question 24

They sell its own securities to the public and invest the proceeds in stocks and bonds

Answer 24

Investment companies

Question 25

They are engage in property liability life insurance and or multiple line products

Answer 25

Insurance companies

Question 26

They are involved in the buying and selling of securities and have a minimum capital of 30 million

Answer 26

Securities dealers or brokers

Question 27

Cater to the financial requirements of smaller firms or individuals

Answer 27

Lending investors

Question 28

They provide immediate cash relief to the individual customers but charge higher rates than most banks and they are capitalized the minimum of 100,000

Answer 28

Pawnshops

Question 29

These are companies catering to a niche market

Answer 29

Mutual building and loan associations and non-stock and loans associations

Question 30

The four major markets of the financial system

Answer 30

Money market capital market foreign exchange market derivatives market

Question 31

It is a segment of the financial market with dealings and short-term maturities of financial contracts

Answer 31

Money market

Question 32

Financial instruments with maturities of less than one year are included in this market

Answer 32

Money market

Question 33

Examples of money market

Answer 33

Treasury bills and short-term commercial papers

Question 34

This market are fixed income debt instruments

Answer 34

Money market

Question 35

Is a segment of the financial market with dealings in maturities beyond one year

Answer 35

Capital market

Question 36

Examples of capital market

Answer 36

Government bonds long-term commercial papers corporate bonds of private companies

Question 37

Types of capital market

Answer 37

Primary market secondary market

Question 38

The form of financial instruments that can be traded in the capital market

Answer 38

Debt versus equity

Question 39

It refers to the issuance of new securities representing an actual transfer of funds from the investor to the issuing entity commonly called the initial public offering

Answer 39

Primary markets

Question 40

It refers to the trading of securities providing a liquidity mechanism and the market for investors

Answer 40

Secondary market

Question 41

The secondary market can be an

Answer 41

Organized market or over-the-counter market

Question 42

It is a financial obligation that has to be repaid with interest

Answer 42

debt

Question 43

It is a form of ownership in an enterprise and does not have to be repaid

Answer 43

Equity

Question 44

These are debts of private corporations which carry interest repayments

Answer 44

Commercial papers

Question 45

It refers to the market dealing in a foreign currencies like yen us dollar and other major currencies

Answer 45

Foreign exchange market

Question 46

In our country most of the trading in foreign currencies is done using the

Answer 46

Philippine dealing system

Question 47

It is an organized secondary market where the buying and selling clients of the bankers association of the philippines meet and where transactions or map or recorded

Answer 47

Philippine dealing system

Question 48

It includes all financial contracts deriving its value form any other underlying assets

Answer 48

Derivatives

Question 49

Example of underlying assets

Answer 49

Security prices commodity prices interest rates and foreign exchange rates

Question 50

The basic classes of derivatives

Answer 50

Futures options swaps and forward rate contracts

Question 51

This provide a risk management tool in the financial system