CORONADO, Gleniece Angeline L.

BSA-2

1. Emerging economies or developing countries are nations that are investing in more
productive capacity. They are moving away from their traditional economies that
have relied on agriculture and the export of raw materials. Leaders of developing
countries want to create a better quality of life for their people. They are rapidly
industrializing and adopting a free market or mixed economy. Setting aside on the
problem of COVID 19, discuss how our country can emerged in the so-called non-
traditional economies. ( Tristan )

Our country can emerged in the non-traditional economies if it could implemenet thr
following: Clean governance, strong leadership, growing infrastructure and policy endeavors that
could catapult the Philippines onto a path of faster growth. The major industries of the
Philippines include manufacturing and agribusiness. Within manufacturing, mining and mineral
processing, pharmaceuticals, shipbuilding, electronics and semiconductors are the focus areas in
order to achieve and create a better quality of life.

2. Zero-coupon bonds do not pay coupon payments and instead are issued at a

discount to their par value that will generate a return once the bondholder is paid
the full face value when the bond matures. U.S. Treasury bills are a zero-coupon
bond. Relative to it, cite the features/characteristics of this bond. In addition, please
find way to present the flow or as simple as brief illustration. ( Ronalie)

Form: T-bills are issued either in physical form as a promissory note or dematerialised form by
crediting to Subsidiary General Ledger (SGL) Account.

Eligibility: Individuals, firms, companies, trust, banks, insurance companies, provident funds,
state government and financial institutions are eligible to invest in treasury bills.

Minimum Bid: The minimum amount of bid is Rs. 25000 and in multiples thereof.

Issue price: T-bills are issued at a discount, but redeemed at par.

Repayment: The repayment of the bill is made at par on the maturity of the term.

Availability: Treasury bills are highly liquid negotiable instruments, that are available in both
financial markets, i.e. primary and secondary.

Method of the auction: Uniform price auction method for 91 days T-bills, whereas multiple price
auction method for 364 days T-bill.

Day count: The day count is 364 days, in a year, for treasury bills.

Besides this, other characteristics of treasury bills include market-driven discount rate, selling
through auction, issued to meet short-term mismatches in cash flows, assured yield, low
transaction cost, etc.

When an investor buys a Treasury Bill, they are lending money to the government. The US
Government uses the money to fund its debt and pay ongoing expenses such as salaries and
military equipment.
 3. While OTC market’s function well during normal times, there is an additional risk,
called a counter-party risk, that one party in the transaction will default prior to
the completion of the trade and/or will not make the current and future payments
required of them by the contract. Find way to illustrate. ( Janel).

The other major risk in OTC trading is that the market for an OTC-listed stock may be
very thinly traded, with extremely large bid-ask spreads that make it very difficult to trade
profitably. For example, a stock may be trading for five cents a share, but with the bid-ask
spread being five cents bid at 10 cents. To purchase the stock, an investor has to pay the asking
price of 10 cents per share for a stock that he or she can only sell for five cents per share. In
short, the investment is down 50% in value as soon as the investor initiates the trade. The stock
has to double in price for the investor to be just barely breaking even.