Understanding Financial Instruments, Markets, Institutions & Services, Exams of Mathematics

Download Understanding Financial Instruments, Markets, Institutions & Services and more Exams Mathematics in PDF only on Docsity! FINANCIAL INSTRUMENTS Financial Instruments It is the tools that help a business daily operations and eventually make it grow. It Helps Financial Manager by: 1. Handle the cash 2. Handle Short term operating requirements 3. Handle Long term business requirements 3 types of Financial esis 1. Money Market oy 2. Long Term Debt vy 3. Stock 7 NN FINANCIAL INSTRUMENTS — MONEY MARKET DEBT It is inexpensive way for government and financial institutions fo raise funds. These funds are usually available for a short period of time. Their rates are generally lower than funds. Bute melas aa alts i. Treasury Bills 2. Co ercial Papers ney Market Funds LONG TERM DEBT : mm codale Ciena e al i. Treasury notes and eyo alo a 2. Federal Agency Dome 3. Municipal Bond va 4. Corporate Bo cn FINANCIAL INSTRUMENTS 4 LONG TERM DEBT FINANCIAL INSTRUMENTS 1. Treasury Notes/Bonds Issued by government, notes mature 2, 5 or 10 years, bonds mature longer (more than 10years). 2. Federal Agency Debt This is United States type of long term debt, and not applicable in the Philippines setting. Issued by federal agencies, has long term maturity (up to 30 years) 3. Municipal Bonds Issued by local government, matures longer (Up to 30 years), and more risky than government securities 4. Corporate Bonds Sil —Te) by Corporations, matures in 40 years, more risky than vy government securities and rely on the financial soundness of ee Fe ee ee ee , es ne Oe oT 2 w FINANCIAL INSOLES STOCK It is type of security that signifies ah a corporation and represents a claim on part of ial —xexelgore)ce lola eo and earnings. Not a sole proprietorship or a partnerships. 2 types of Stock Ree i. Preferred Stock. 2. Common Stock FINANCIAL INSTITUTIONS KINDS OF NONBANK 1. Leasing Companies — not banks and not governed by central bank, but also extend credit or financing to companies that need it for their projects. 2. Investment Companies — regulated by Security and Exchange Commission and perform similar functions as bank in the sense that they can provide funding to companies or raise funds thru bond issuances or initial public offerings. 3. Mutual Funds — collective investments or funds of small investors pooled together and managed to be able to reach maximum returns. FINANCIAL INSTITUTIONS KINDS OF NONBANK 4. Insurance Companies — sell insurance coverage to provide guarantee of compensation for specified death, illness, accident, loss, or damage to property in return for a payment of a premium. Sells peace of mind and protection. 5. Private Equity Funds — not regulated by government or any regulatory body. Funds are managed by private fund managers and private investors and owners are able to invest more aggressively in the financial markets. ROLE OF FINANCIAL MANAGE Financial Manager Role 1. Maximize the profit of the Organization 2. Invest money in project that is worthwhile 3. Evaluate Business Project 4. Invest new business, venture or new manufacturing plant for company expansion 5. Invest his money to train his people to continue servicing his customers and to continue doing a good job ACTIVITY < Name: Strand: 1. What are the 3 Financial Instruments used by organization to start up new business, for expansion, and for profit maximization? Explain Each. 2. If you are a Financial Manager, how will you evaluate the following business with regards to their stand in market: Choose 4 business you like to evaluate and explain its Income, its Capital, its effectiveness in market, and the way the business earns profit. Expedite your answer. a. Serendipilea Milk Tea House b. Angels Burger c. Chooks to Go d. Watsons e. Gerry's Grill f. Siomai King g. Robinson Mall h. Dickies Please follow the format: Name of Company: Potato Corner Financial Business Project Evaluation Money Liquidity: Income are expected to arise because Potato corner has many branches. There are 65 branches of Potato corner out of 72 SM Store branches in the Philippines. Capital Structure: It cannot easily gone astray because it earns 2,900 a day per branches. So it earns a lot of profit. Asset Management: Over all in the country, Potato Corner has 1,100 branches and 200 outside the country. And it is their asset that sustain the stability of a stall. Managing Profitability: Profits are stable because it is the leading brand in French fries food industry for over 25 years.