Financial Institutions, Instruments, and Markets

Business Finance

​Suppose you have excess funds. What would you do with it?

Business Finance

​Would you keep them with you or deposit them in a bank account?

Business Finance

​Do you know that you are indirectly lending your money if you deposit it on a bank account?

Business Finance

Financial institutions facilitate the flow of savings to lending and investments. 

Multiple Choice

It is one of the factors that directly an indirectly affect the financial operations of a business organization.

• Financial System

• Financial Instruments

• Financial Institution

• Financial Markets

Business Finance

​Financial decisions made by individuals and households greatly impact the economy.

Business Finance

​Governments and businesses decisions are also important units in the economy.

Business Finance

​Financial managers help these units make wise financial decisions.

Business Finance

​If the financial decisions of all these units contribute to a healthy financial system, economic sustainability could be achieved.

Multiple Choice

These are organization that provides financial services, among others, in the form of loan, credit. Fund administration, financing, depository, and safekeeping financial institutions is a broad term that compasses all organizations that provide the aforementioned financial services.

• Financial System

• Financial Instruments

• Financial Institution

• Financial Markets

Depository Institutions:

A. Banks:​

1. Universal bank

2. Commercial bank

3. Thrift bank

4. Rural bank

5. cooperative bank

6. Islamic bank​

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​Classification of Financial Institutions:

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Depository Institutions:

B. Savings and Loans Assn.

referred to as financing and mortgage loan company, is a financial institution that is engaged in the business of accumulating the savings of its member and stockholders and using such accumulations for loans or investment in securities of productive enterprises.​

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​Classification of Financial Institutions:

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Depository Institutions:

C. Trusts Companies

Is a legal business entity, usually a major division of a universal or commercial or commercial bank, that acts as a fiduciary agent or trustee on behalf of an individual person or corporate entity for the purposed of management, administration, and final transfer of property to the beneficiary.

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​Classification of Financial Institutions:

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Depository Institutions:

D. Credit Unions

❑A credit unions is a financial depository institution that is mainly controlled and operated by its members for the following purposes:

✓Extending credit to members

✓Offering competitive interest rates

✓Promoting the concept of thrift

✓Providing other types of financial services

​Classification of Financial Institutions:

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Multiple Choice

Is a type of financial institution that acts as the middleperson between two parties- the investors and the borrowers

• Financial System

• Financial Intermediaries

• Financial Institution

• Financial Markets

❑ Mutual funds this accumulate money through selling shares of stocks or bonds of publicly-listed corporations to individuals or corporate investors. The fund from the proceeds of the sale are pooled together and channeled to the borrowers.

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❑ Pension funds set up by a business for the purpose of paying the pension requirements of all private sector employees who retire from the business organization upon reaching their retirement age.

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❑ Insurance companies acts as a financial intermediary by pooling together the proceeds of insurance policies sold to the public and investing the accumulated funds in high-yield maturing securities from investment houses.

Multiple Choice

It is a financial market where stocks and bonds are issued for medium, and long term periods. Stocks are treated as equity securities while bonds are technically considered debt securities.

• Capital Markets

• Financial Intermediaries

• Financial Institution

• Financial Markets

Multiple Choice

Is a financial market where a corporation can issue new shares of stock. Stock corporation that need fresh capital can raise the required funds by issuing new shares of stock.

• Capital Markets

• Primary Markets

• Secondary Markets

• Financial Markets

Multiple Choice

Is a financial market where financial securities are traded between or among investors. In the secondary market, there is no issuance of new shares from the corporation.

• Capital Markets

• Primary Markets

• Secondary Markets

• Financial Markets

Multiple Choice

Is a market in which the financial securities of public listed corporation are traded following a standardized contract agreement and procedures. A corporation is classified as publicly-listed when its shares are available for sale to the public.

• Capital Markets

• Primary Markets

• Secondary Markets

• Public Markets

Multiple Choice

The third element of the financial system at the regional or national level. Without it, financial institutions and financial markets can hardly exist.

• Financial Markets

• Financial Instruments

• Financial Institutions

• Public Markets

​The most common forms of financial instruments are as follows:

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1. Cash – on the part of the holder, cash is a financial asset.

2. Check - it is a financial asset of the payee, but is considered and a financial liability of the drawer or issuer.

3. Loan – it is a financial asset of the lender or creditor and a financial liability of the borrower or the debtor.

4. Bond – It is a financial asset of the holder or investor but considered a financial liability of the issuing company.

(1. Term bond 2. Serial bond 3. Secured bond 4. Debenture bond 5. Convertible bond 6. Callable bond)​

5. Stock – it is a financial asset of the investor or shareholder but an equity of the issuing company.

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Short Essay. Answer the following questions briefly and concisely.

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​ Your best friend’s father was recently laid off from his work because of the pandemic. Although they have Php 550,000 in their savings account, it is obvious that it is not enough to cover all the expenses of their family for a year. Which financial  institutions can help their family and how?

​Questions and Inquiries: Challenge yourself!

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