Exercise No.

Mod 1-1 (Case Study)

Property Corporation requires funds for its inventory, payment of salaries and wages, payment of utilities
and other monthly operating costs.

a). You are to suggest which financial market; the company may approach and why?

I will suggest to the Property Corporation that they may use the Money Market. On what they
have said, they need funds for their inventories, payment of salaries and etc, which is usually done in a
year or every month of the period. Also, the funds can be converted easily into cash since they will need
money most of the time.

b). Discuss the financial instruments to raise in this requirement.

The financial instrument to raise in this requirement is the cash. From what I have said, they will
probably need it most of the time. This financial instrument can be redeemed in one year or less. Some of
the financial instrument in the money market is treasury bills, deposits, certificates of deposit, bills of
exchange and etc. that the company needs based on their problem.

Exercise No. Mod 1-2 (Case Study)

Incorporated in 2000, Dairy Corporation is one of the leading manufacturers and marketers of dairy-based
branded foods in India. In the initial years, its operation was restricted only to collection restricted only to
collection and distribution of milk. But, over the years it has gained a reasonable market share by offering
a diverse range of dairy based products including fresh milk, flavored yogurt, ice creams, butter milk,
cheese, ghee, milk powders etc. In order to raise capital to finance its expansion plans. Dairy Corporation
has decided to approach capital market through a mix of Offer for sale and a public issue of shares.

a). Name and explain the types of financial market being approached by the company.

The first type of Financial Market that Dairy Corporation used is the Capital Market. It is because
they are for the long term productive use, wherein the investments on their corporation have matured
beyond one year before gaining a reasonable market share. They also used the Primary Market because
they need to finance the expansion that they have planned for the company. They will not be able to raise
a capital for the expansion without the help of the investments or the lenders who can fund the project.

b). Identify the possible financial instruments to be raised for this.

The possible financial instrument that the Dairy Corporation have used is the derivatives. It
includes the stocks, bonds, interest rates that are commonly purchased through the brokerages. They
cannot be traded easily and have higher risk since their value is changing base on how the company's
performance. It also involved future contracts and is mainly for long term use.

Exercise No. Mod 1-3 (Case Study)

Gabriel won a cash prize of Php 20,000 in the National level Robotics Competition. On the advice of his
father, he visits a nearby bank to open a fixed deposit account in his name with the prize money. His
sister Heart accompanied him to the bank. On reaching the bank, he notices big banners which are
placed within the premises containing information about the various arrangements through which
corporates may raise their capital through the bank. Being a finance graduate, Heart explains to Gabriel
that banks play the role of the financial intermediary by helping in the process of channelizing the savings
of the households into the most profitable business ventures.

a).Aside from the bank, suggest other financial intermediaries that help in the process of channelizing the
savings of the households into the most productive to use.

Aside from the bank the other financial intermediaries that I can suggest to Gabriel where he can
save his money are on the insurance company, investment bank or on the pension fund. This way the
money that he have won is safe and in good hands or the money will increase over the year, it can also
be used for their future. Since Gabriel wanted the money to be on its most productive use for their family.

b). Identify the functions of those financial intermediaries that you will be suggesting.

The functions are of the Financial Intermediaries that I suggested are:

First is on the Insurance Company, its function is to help assess your risk, ensure and provide you with
the proper and right coverage to compensate you from any loss in the future. It will protect you and
help your family financially under life's uncertainties.

Second is the Investment Bank, it is the bridge between the large enterprise and the investor, wherein
their role is to advise businesses and governments on how to meet their financial challenges. They are
also efficient in collecting deposits and lending, you won't also need to find the right lenders because
they are the specialist. So the money that will be invested is safe from anything.

Lastly, is the Pension Fund, it manages the people’s savings and retirement. Their primary objective is to
provide pensioners who have reached retirement age to have a lifetime pension or capital.