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BUSINESS FINANCE > Prelims > Flashcards

Prelims Flashcards

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1
Q

The study of money and assets coupled with the management and use of those assets to build wealth (wealth maximization).

A

FInance

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2
Q

It is the branch of economics concerned with resource allocation as well as resource acquisition, management, and investment.

A

Finance

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3
Q

It is the business discipline concerned with managing money efficiently.

A

Finance

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4
Q

It is the study of fund management and asset allocation over time.

A

Finance

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5
Q

The provision of money at the time when it is needed by a business”.

A

Business Finance

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6
Q

THREE AREAS OF FINANCE

A
  1. Financial Institutions and Markets
  2. Investments
  3. Financial Management
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7
Q

where the providers and users of funds interact with the help of the financial intermediary.

A

Financial Institutions and Markets

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8
Q

Concerned with creating financial assets, markets for trading securities, and regulations for the financial markets.

A

Financial institutions and market

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9
Q

involve the buying and selling of financial securities, the analysis on making an investment, and risk management.

A

Investments

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10
Q

more concerned with the raising, allocating, and controlling the firm’s funds.

A

Financial Management

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11
Q

2 Categories of Finance

A
  1. Public

2. Private

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12
Q

concerned with the government revenues and spending, and their general effect on the economy.

A

Public Finance

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13
Q

application of finance other than public finance

A

Private Finance

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14
Q

Types of Private Finance

A

PERSONAL FINANCE
NONPROFIT ORGANIZATION
BUSINESS FINANCE

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15
Q
  • Deals primarily with the management of the finances of the individuals and households.
  • Concerned with how to acquire financial requirements to meet personal needs.
  • Involves budgeting, saving, investing, and spending the finances to maintain, sustain, or enhance economic well-being.
  • Individuals must consider the types, benefits, and risks of investments that they intend to make such as banking products, insurances, retirement plans, stock market, and mutual funds.
A

Personal Finance

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16
Q

Types of NPOs

A 
Arts, culture, and humanities
Education
Environment and Animals
Health
Human Services
International and Foreign Affairs
Public and Societal Benefit
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17
Q

Is the management of funds and other valuable assets to be used in the conduct of business.

A

Business Finance

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18
Q

It deals with assets, liabilities, income and expenses. It involves recording past transactions, analyzing past performance, and preparing and interpreting financial statements of the business for the past year.

A

Accounting

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19
Q

It involves using the accounting data and information in running the business and ensuring the sufficiency of funds for future operations.

A

Finance

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20
Q

He/she thinks of ways to efficiently use money for the daily operations of the company and its sustainability in the future.
He/she is involved in every activity of the company that requires funds and budgets.

A

Finance Manager

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21
Q

Role of the Finance Manager

A

Investment Decision
Financing Decision
Dividend Policy decision

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22
Q

manages corporate assets and liabilities, plans the finances, budgets capital, financing the business, formulates credit policy, and manages the investment portfolio.
manages external financing matters

A

Treasurer

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23
Q

asked with internal matters – financial and cost accounting, taxes, budgeting and control functions.

A

Controller

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24
Q

oversees the entire financial activity and serves as adviser in finance matters to the Board of Directors.

A

Chief Finance Officer

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25
Q

involved in the production of goods and services

A

Economic System

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26
Q

creates and manages credit facilities including the supply of money and the much-needed financial instruments.

A

Financial System

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27
Q

which pertain to the intricate network of the facilities and processes involving the different economic units, make available loanable funds as vast financial resources and extend credit facilities that hasten production of goods and services being undertaken as an integral part of the economic system.

A

Financial Markets

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28
Q

Basic Functions of the financial system

A 
Promote Savings
Payment
Protection against risks
Means to wealth
Provide liquidity
Credit facility
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29
Q

are all licensed with the Bangko Sentral ng Pilipinas under Republic Act No. 8791 “General Banking Act of 2000”

A

Philippines’ comprehensive banking system

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30
Q

Classifications of the Philippines Financial System

A

Banking Institutions

Non-Bank Financial Institutions

31
Q

It has the authority to exercise as a commercial bank, the powers of an investment house , and the power to invest in non-allied enterprises.

A

Universal Bank

32
Q

Its common functions are:

  • Accept drafts and issue letters of credit
  • Discount and negotiate promissory notes, drafts, bills of exchange, and other evidences of debt
  • Accept or create demand deposits
  • Receive other types of deposits and deposit substitutes
  • Buy and sell foreign exchange and gold or silver bullion
  • Acquire marketable bonds and other debt securities
  • Extend credit subject to such rules as the Monetary Board may promulgate
A

Commercial Bank

33
Q

Primarily concerned with the mobilization of savings and loans, Provides short-term working capital, medium, and long-term financing and diversified financial and allied services for their chosen market and constituency especially for small and medium enterprises and individuals.

A

Thrift Bank

34
Q

A retail and commercial bank owned, organized, and managed by cooperatives, a federation of cooperatives, or credit unions.
Accepts, deposits, and provides loans to individuals to undertake ventures in accordance with the principles of the cooperative.

A

Cooperative Bank

35
Q

It carries out the purpose and functions of conventional banking with strict adherence to Islamic law and ensuring fair play at its core. Islam forbids lending money for the purpose of interest. The basic principle of Islamic banking is based on risk-sharing which is a component of trade rather than risk-transfer which is seen in conventional banking. Islamic banking introduces concepts such as profit sharing, safekeeping, joint venture, cost plus, and leasing.

A

Islamic Bank

36
Q

Controlled by the government. Plays a special role in the economic development of the country.

A

Government Bank

37
Q

An enterprise whose function is to underwrite securities of another person or enterprise, including securities of government and private companies.
Provides planning, consultancy, fund management, and fund raising through equity financing and borrowings.

A

Investment Bank

38
Q

has fixed number of shared offered by an investment company through an initial public offering (IPO).

A

Close-end fund

39
Q

also known as a mutual fund, does not have restrictions on the amount of shares the fund will issue. Redeemable anytime and on day-to-day basis with no fixed amount of paid-in capital. If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open-end funds allow investors to buy back shares anytime they want.

A

Open-end Fund

40
Q

are companies which buy and sell stocks of other companies for the purpose of reselling them for a profit. They do not receive commission since they are generating profit based on their trading.

A

Securities Dealers

41
Q

are individuals or firms engaged in the buying and selling of stocks for the purpose of commission.

A

Securities Brokers

42
Q

Provides insurance in case of loss to the insured individual and firms. It is a transfer of risk of a loss from one entity to another in exchange for payment called premiums.

A

Insurance Companies

43
Q

is a way of risk management, to hedge against the risk of an uncertain loss. It may take the form of life, health, real estate, fire, accident, and even credit card insurance.

A

Insurance

44
Q

It is composed of member-owned producers and consumers. Operated for the purpose of promoting thrift, short-term credit at competitive rates and providing other financial services to its members.

A

Credit Union

45
Q

A financial institution that extends financing to relatively low-income individuals. Borrowing requires collateral to guarantee payment. Collateral may take the form of real estate, jewelry, gadgets, and other valuable items.

A

Pawnshop

46
Q

brings together the users and the providers of funds without having them meet face to face. They are also known as indirect form of funds channeling. Middleperson.

A

Financial Intermediary

47
Q

is the ability to convert assets into spendable forms, i.e., money, quickly.

A

Liquidity

48
Q

Why use a financial intermediary

A

Highly qualified people to assess risky investments.
Knows how to diversify.
Cost advantage or economies of scale.
Reconcile conflicting interests of users and lenders of funds.
Give savers liquidity.

49
Q

is a mechanism where buyers and sellers participate in the trade of financial assets such as stocks, bonds, currencies and derivatives.

generally characterized as having formal regulations; transparent pricing; basic regulations on trading, costs and fees; and market forces determining the prices of the securities being traded.

A

Financial Market

50
Q

Two types of financial markets

A

Money Market

Capital Market

51
Q

a market intended for short-term placements. The placement usually takes a year or less to mature. This exists for people and firms that are looking for temporary investments where their idle funds could be placed and earn an additional income.

A

Money Market

52
Q

Money Market Instruments

A 
Certificate of Deposit
Commercial Paper
Repurchase Agreement
Treasury Bills
Banker's Acceptance
53
Q

a time deposit with a fixes rate

A

Certificate of Deposit

54
Q

unsecured promissory note with a fixed maturity of 1 to 270 days. CP is a money market security issued by high credit rating companies to raise money to meet short-term obligations.

A

Commercial paper

55
Q

a financial instrument wherein one party sells a financial instrument to another party at a specified price with a commitment to repurchase the financial instrument at a fixed amount agreed at a specific date.

A

Repurchase Agreement

56
Q

an obligation by the national government; the interest is normally higher than the savings and time deposit; regarded as risk-free investment because the payment of which is guaranteed by the government.

A

Treasury Bills

57
Q

a bank draft where the bank is required to pay the holder a specified amount on a specified date; has a maturity date of 90 days from date of issue but can be extended up to 180 days.

A

Banker’s Acceptance

58
Q

market for long-term financial instruments. Included are issuances of securities and long-term obligations by businesses and government agencies.

A

Capital Market

59
Q

Two important elements of the capital market

A
  1. Organized Securities Exchange

2. Over-the-Counter Market

60
Q

Types of Capital Market

A
  1. Primary Market

2. Secondary

61
Q

a securities market place that operates under the rules and regulations formulated and adopted by an exchange.

A

Organized Securities Exchange

62
Q

the buying and selling of financial instruments but not in an organized securities exchange.

A

Over-the-counter Market

63
Q

where firms and government agencies raise money by means of issuing financial instruments like stocks and bonds for the first time.

A

Primary Market

64
Q

securities are sold to the public for the first time.

A

Initial Public Offering

65
Q

also called the aftermarket. A place where financial instruments already issued are traded.

A

Secondary Market

66
Q

place where long-term debt instruments are issued by firms and government agencies to raise money.

A

Bond Market

67
Q

a place where raw or primary commodities are traded. The commodities are traded on regulated commodities exchanges where they are bought and sold in standardized contracts. Ex., corn, sugar, coffee, cotton, copra, and tea.

A

Commodity Market

68
Q

place where publicly listed stocks are bought and sold.

A

Stock Market

69
Q

market where exchange of derivatives take place.

A

Derivatives Market

70
Q

financial instrument used to manage investment risk. Its value relies on underlying assets such as stocks, bonds, commodities, currencies, interest rates, and market indices.

A

Derivatives

71
Q

a venue for the exchange of currencies

A

Foreign Exchange Market

72
Q

3 Major types of business organizations

A

Sole Proprietorship
Partnership
Corporation

73
Q

a link to provide a forum in which suppliers of funds and demanders of loans/investments can transact business directly.

A

Financial Markets

BUSINESS FINANCE (1 decks)

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