IPM Flashcards
(43 cards)
functions as an intermediary and facilitates the flow
of funds from the areas of of surplus to the areas of
deficit. It is a composition of various institutions
markets, regulations and laws, practices, money
managers, analysts, transactions, and claims &
liabilities
FINANCIAL SYSTEM
SIX PARTS OF THE FINANCIAL SYSTEM
Money
Financial Instruments
Financial markets
Financial institutions
Government regulatory agencies
Central banks
to pay for our purchases and to store
our wealth.
Money
to transfer resources
from savers to investors and to transfer risk to
those who are best equipped to bear it. Stocks, mortgages, and insurance policies are examples
of
Financial instruments
allows us to buy and sell
financial instruments quickly and cheaply. The
Philippine Stock Exchange is an example of a
financial market.
Financial markets
provide a myriad of
services, including access to the financial
markets and collection of information about
prospective borrowers to ensure they are
creditworthy. Banks, securities firms, and
insurance companies are examples of
Financial Institutions
they are
responsible for making sure that the elements of
the financial system-including its instruments, markets, and institutions-operate in a safe and
reliable manner.
Government regulatory agencies
monitor and stabilize the
economy. The Bangko Sentral ng Pilipinas is the
central bank of the Philippines
Central Banks
CORE PRINCIPLES OF MONEY AND
BANKING
Core principle
1. TIME HAS VALUE
2. RISK REQUIRES COMPENSATION
3. INFORMATION IS THE BASIS FOR DECISIONS
4. MARKETS DETERMINE PRICES AND ALLOCATE RESOURCES
5. STABILITY IMPROVES WELFARE
is the process of buying assets that
increase in value over time and provide returns in
the form of income payments or capital gains.
Investing
is the net gain or loss of an
investment over a specif ed time period, expressed as
a percentage of the investment’s initial cost.
rate of return (RoR)
The uncertainty regarding the outcome of a
situation
Risk
The possibility that an investment
will fail to pay the expected return or fail to pay a
return at al
Investment risk
FINANCIAL RISK PYRAMID
Speculation
Wealth accumulation- investment
Financial security - Saving tools
The rise in the general level of price
Inflation
The danger that money won’t be
worth as much in the future as it is today..
Inflation risk
Each individual has a tolerance level for the
amount of risk they are willing to take on the
greater the risk a person is willing to make on an
investment, the greater the potential return will
be.
INVESTMENT PHILOSOPHY
TYPES OF INVESTMENT TOOLS
SBMIRS
- Stocks
- Bonds
- Mutual Funds
- Index Funds
- Real Estate
- Speculative Investments
A share of ownership in a company
Stocks
-owner of the
stocks
Stockholder or shareholder
RETURN OF STOCKS
Here are two ways people can make money on stocks:
Dividends
Market price
are the share of profits
distributed in cash to stockholders
DIVIDENDS
the current price that a buyer is
willing to pay for stock
Market price
- stocks are bought and sold on
_______ by people called ______
The main stock markets in the U.S. are:
STOCK MARKETS
brokers
New York Stock Exchange (NYSE)
NASDAQ
