Republic of the Philippines

EDUARDO L. JOSON MEMORIAL COLLEGE

PALAYAN CITY, NUEVA ECIJA 3132

Final Examination
Financial Market

1. How does a healthy financial institution help improves the economy? Explain. (4 points)
2. Explain the importance of “securities standardization” (4 points)
3. What is Information asymmetry and how to properly deal with it? (4 points)
4. How do insurance companies work? (4 points)
5. What is pension fund and how it works? (4 points)
6. What is a finance company? (4 points)
7. Time affects the value of financial instruments. How come? (4 points)
8. What are the Five Core Principles of Money and Banking (5 points)
9. Explain what is liquidity risk (3 points)
10. Why is not ideal for a bank to have excessive current assets? (4 points)
11. How come the excess of the bank's long-term assets over its long-term liabilities is an indication of its
solvency, its ability to continue as a going concern? (4 points)
12. Function of Federal Reserve (Fed). (3 points?)
13. What is the major asset for most banks? (1 point)
14. What is an asset-backed security? (3 points)
15. Give at least 2 benefits of securitizing different loans into asset-backed securities which are then sold
to investors. (2 points)
16. Give at least 3 sources of bank borrowings. (3 points)

Total: 56 points
God bless.

Answer key: Various essay/explanations.