Prelim

Question 1

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

Answer 1

Financial System

Question 2

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

Answer 2

Financial Institutions

Question 3

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

Answer 3

Financial intermediary

Question 4

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

Answer 4

Financial markets

Question 5

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

Answer 5

Bank

Question 6

Types of intermediaries

Answer 6

Deposit-takers
Non-deposit taker

Question 7

Two types of financial markets

Answer 7

Capital markets
Money markets

Question 8

5 Basic principles of banking

Answer 8

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

Question 9

Functions of banks

Answer 9

Traditional or core functions
Modern functions

Question 10

Traditional functions of banks are

Answer 10

Accepting deposits
Lending
Funds remittance
Miscellaneous services

Question 11

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

Answer 11

Modern Banking

Question 12

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.

Answer 12

Modern commercial banking

Question 13

Emerging trends in banking

Answer 13

Universal banking
Globalization of banking
Electronic banking

Question 14

Characteristics and key functions of money

Answer 14

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

Question 15

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

Answer 15

Supply and Demand for Money

Question 16

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.

Answer 16

Interest

Question 17

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.

Answer 17

Time value of money

Question 18

Formula on determining the interest rate

Answer 18

I = (p * r * t)

Question 19

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

Answer 19

Nominal interest rate

Question 20

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

Answer 20

Real interest rate

Question 21

Impact of changing interest rate

Answer 21

Higher interest rate
Lower interest rate

Question 22

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

Answer 22

Higher interest rate

Question 23

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

Answer 23

Lower interest rate

Question 24

It facilitates transactions in the economy

Answer 24

Money

Question 25

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

Answer 25

Payment system

Question 26

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

Answer 26

Commodity money

Question 27

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

Answer 27

Flat money

Question 28

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

Answer 28

Legal tender

Question 29

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

Answer 29

Cheques

Question 30

Benefits of payment system

Answer 30

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

Question 31

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

Answer 31

Automated clearing house

Question 32

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

Answer 32

Automated teller machine

Question 33

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

Answer 33

Asymmetric information

Question 34

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

Answer 34

Bitcoin

Question 35

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

Answer 35

Blockchain

Question 36

Demand for money

Answer 36

Transaction demand Precautionary demand Speculative demand

Question 37

Quantity theory of money

Answer 37

M * v = p * y

Question 38

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

Answer 38

Financial instrument

Question 39

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

Answer 39

Contract

Question 40

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

Answer 40

Financial asset

Question 41

Types of financial instruments

Answer 41

1. Primary instruments or cash instruments 2. Derivative financial instruments

Question 42

This has financial assets financial abilities and equity instruments

Answer 42

Primary instruments or cash instrument

Question 43

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

Answer 43

Derivative financial instrument

Question 44

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

Answer 44

Derivatives

Question 45

Types of derivative financial instrument

Answer 45

1. Future/ forwards 2. Options 3. Swaps

Question 46

The philippine financial system included of BSP

Answer 46

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

Question 47

It is regulated the insurance commission

Answer 47

Insurance providers

Question 48

It is regulated by securities and exchange commission

Answer 48

Stock corporation