MODULE #4 FINANCIAL MARKET

SOUTHERN PHILIPPINES INSTITUTE

OF SCIENCE AND TECHNOLOGY
Tia Maria Bldg., E. Aguinaldo Highway, Anabu 2-A, 4103 Imus, Cavite
Tel. nos. (046) 875-34-58, (046) 471-2930

COURSE/YEAR LEVEL : BSA / 2nd Year

SUBJECT : Financial Market
SEMESTER : 2
MODULE # : 4
INSTRUCTOR : MS. SHERIDANNE P. GILO

PLEASE BE REMINDED!
No part of this module should be reproduced in any form (photocopying, recording and mimeographing) without
permission from the SPIST management.

Page 1 of 7
SOUTHERN PHILIPPINES INSTITUTE OF SCIENCE & TECHNOLOGY # my second home www.facebook.com/spist official 046-471 29 30 0949 927 15 32
 MODULE #4 FINANCIAL MARKET

SOUTHERN PHILIPPINES INSTITUTE ● EXPLORE—interactive activities

OF SCIENCE AND TECHNOLOGY ● APPLICATION TASK--- activities, questions requiring analytical, critical, and creative
application of the topic
(this would be in any form)
SUBJECT: FINANCIAL MARKET ⮚ SELF-CHECK/ASSESSMENT—formative & summative assessment; varied forms of assessment that
UNITS: 3 UNITS are aligned to intended learning outcomes (this would be in any form)
HOURS/ WEEK: 3 HOURS PER WEEK ⮚ REFLECTION—“what do you think and feel about the lesson”
COURSE CODE: ⮚ ASSIGNMENT
⮚ SUGGESTION’S PAGE/ FEEDBACK
COURSE DESCRIPTION: This course aims to develop students understanding of the basic principles of
financial markets and provides an introduction to how assets are valued and traded in those markets. It
⮚ GENERAL INSTRUCTIONS:
also considers stock market prices and returns; stock market risk and the influence of risk on the pricing 1.Read first before doing anything.
of shares. This would help the students to assess risks and returns, and the trade-off between the two in 2.USE THE ACTIVITY SHEETS FOR YOUR ANSWERS. ( THIS WOULD BE SUBMITTED TO THE
their future decision-making. INSTRUCTOR)
3.Read the instructions carefully before doing each task.
4.Observe honesty and integrity in doing the tasks /activity.
5.Finish the task at hand before proceeding to the next.
Course Requirements: 1.WRITTEN PERFORMANCE 25% , PERFORMANCE TASK 50%, MAJOR NOTE: DON’T FORGET TO WRITE YOUR NAME AND DATE SUBMITTED IN YOUR ACTIVITY SHEET.
EXAMINATION 25% TOTAL = 100% 2.Prelim, Midterm, Pre-Final, & Final examination IF YOU ENCOUNTER ANY DIFFICULTY IN ANSWERING THE TASKS/ACTIVITY, DO NOT HESITATE TO CONSULT
YOUR INSTRUCTOR. ( MOBILE# 0905 335 3986, GMAIL: sgilo@spist.edu.ph)

REFERENCE/s:
This module is composed of the following elements: CORPORATE FINANCE INSTITUTE., (2015) FINANCIAL MARKET. Retrieved from
⮚ COURSE DESCRIPTION https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/financial-markets/
⮚ COURSE REQUIREMENTS—GRADING SYSTEM BUSINESS JARGONS., (2021).FINANCIAL MARKET. Retrieved from
https://businessjargons.com/financial-market.html
⮚ REFERENCES/COURSE RESOURCES
⮚ GENERAL INSTRUCTIONS
⮚ MODULE OVERVIEW: It describes the module. ( “the ALL about”)
⮚ INTENDED LEARNING OUTCOMES: What students should be able to do at the completion of a INTENDED LEARNING OUTCOMES
module ( based from the syllabus)
⮚ CONTENT: Topics 1. Know and understand the meaning of Financial Institution
2. Recognize the role and importance of Financial Institutions
⮚ LEARNING SEQUENCE:
3. Describe the different types of Financial Institutions
● ENGAGE/ CONTENT FOCUS---presentation of inputs and knowledge
( facts, concepts, theories)—“what to discuss”
Page 2 of 7
SOUTHERN PHILIPPINES INSTITUTE OF SCIENCE & TECHNOLOGY # my second home www.facebook.com/spist official 046-471 29 30 0949 927 15 32

CONTENT
LEARNING SEQUENCE STARTS HERE!
Financial Institutions
• A financial institution can be defined as an organization that processes financial
transactions such as loans, deposits and investments.
• Financial institutions plays the role of intermediaries in the financial market thet
facilitates the allocation and deployment of funds.
Role and Importance
The primary role of financial institutions is to provide liquidity to the economy and permit a
higher level of economic activity than would otherwise be possible. Financial institutions are
needed to resolve the limitations caused by market imperfections such as limited information
regarding the creditworthiness of borrowers. They provide varied kinds of financial services to
the customers, an attractive rate of return and helps in forming the liquidity of the stock in
case of an emergency in the financial markets. Also, the institution promotes the direct
investment by the customers and making them understand the risk associated with that as
well.
SOUTHERN PHILIPPINES INSTITUTE OF SCIENCE & TECHNOLOGY # my second home www.facebook.com/spist official 046-471 29 30 0949 927 15 32
MODULE #4 FINANCIAL MARKET
Functions
• The financial institutions provide loans and advances to the customers.
• The rate of return is very high in case of investment made in this type of institution.
• It also gives a high rated consultancy to the customers for their beneficial investments.
• It also serve as a depository for their customers.
• It can also make an effort to minimize the monitoring cost of the company.
• All the finance related work is done by the financial institution or on behalf of the
customers
Types of Financial Institutions
1. Commercial banks- A Commercial bank accepts deposits & provides security in a
convenient way to its customers. Previously, a part of the prime purpose of these banks was to
provide security to the customer’s money. Commercial banks also generate loans that
individuals & businesses utilize to purchase goods or even expand business operations. A
Commercial Bank is also a type of Financial Institution that often performs roles as a payment
agent within a country & between nations.
Page 3 of 7
 MODULE #4 FINANCIAL MARKET

2. Investment Banks- While an investment bank is also referred to as a normal “bank,” its Features
operations are very different from the deposit-gathering commercial banks. An investment
• It provides a high rate of return to the customers who have invested in the financial
bank is an institution that acts as a financial arbitrator that performs a wide array of services
institution.
for governments and businesses.
• It reduces the cost of financial services provided.
3. Insurance companies- An Insurance company pools risk by gathering premiums from a
large number of people who wish to protect themselves or their loved ones from particular • It is considered very important for the development of financial services in the country.
losses. These losses may include car accidents, fire incidents, disability, lawsuit, illness or
• It also advises the customers on how to deal with the equity and the other securities bought
death. Insurance companies also help individuals & companies to manage risk & preserve
and sold in the market.
wealth.
• It helps to improvise decision-making because it follows a systematic approach to calculate
4. Brokerage Firms- Brokerages act as arbitrators between buyers & sellers. They mainly
all the risks and rewards.
assist in securities transactions. A Brokerage company is compensated via commissions after
successful completion of transactions. For e.g. when the trade order for some stocks is carried
out, a person generally pays a transaction fee. He pays this fee for the efforts the brokerage
Financial Institution vs Banks
company puts in, to implement the trade.
• The functions of payments of various services are done by the bank but the financial
institutions will not be able to do so.

• It cannot accept the demand deposit whereas the banks can accept the demand deposit by
the customers.

• Banks provide the guarantee of repayment of the deposit whereas the financial institutions
may fail to do so.

Page 4 of 7
SOUTHERN PHILIPPINES INSTITUTE OF SCIENCE & TECHNOLOGY # my second home www.facebook.com/spist official 046-471 29 30 0949 927 15 32

• Banks provides services to both public as well as the industry as a whole. While on the other
hand, financial institutions provide services only to industry.
Advantages
● The financial institutions help in the
upliftment of the economies of our country.
● It has been proved to be more
successful in terms of return earned by the
customers since the rate of return is higher
compared to any other place.
● It is also a smart way to invest money
and keep the money rotated in the finance
market.
● It provides financial services to the
customers.
● The repayment facility is also very
well managed in financial institutions.
● It also provides underwriting facilities.
SOUTHERN PHILIPPINES INSTITUTE OF SCIENCE & TECHNOLOGY # my second home www.facebook.com/spist official 046-471 29 30 0949 927 15 32
MODULE #4 FINANCIAL MARKET
ACTIVITY SHEETS
Disadvantages COURSE : _____________
MODULE # : 4
INSTRUCTOR: Ms. Sheridanne P. Gilo
NAME OF THE STUDENT:________________________
● The process is very complex for some YEARLEVEL/COURSE: ________________________
DATE SUBMITTED: _________________________
customers because they try to indulge in
various businesses and end up making
Activity 1
confusion for themselves.
● In case of default done by the 1. Expound the meaning of Financial Institutions
management of the financial institutions, the
customers will have to face major worse
EX
circumstances. The money which they have
PL
invested may not be recovered. Sometimes O
RE
the principal amount is not assured to be
recovered because the government in case of
default announces a certain sum of money
which will be repaid and most of the time the
amount of government declares to be repaid
is very less in comparison to the principal
amount of the investment made.
Page 5 of 7
 MODULE #4 FINANCIAL MARKET

Activity 2 Activity 3

2. Based on your understanding, explain the role and importance of Financial Institution Explain the difference between Financial Institution and Banks

Page 6 of 7
SOUTHERN PHILIPPINES INSTITUTE OF SCIENCE & TECHNOLOGY # my second home www.facebook.com/spist official 046-471 29 30 0949 927 15 32
 MODULE #4 FINANCIAL MARKET

Activity 4 REFLECTION

In your own words, discuss the different types of Financial Institution WHAT DID I LEARN?__________________________________________________________
___________________________________________________________________________

Type of Financial Institution Discussion

SUGGESTION’S PAGE

● YOU MAY WRITE YOUR FEEDBACK AND SUGGESTION REGARDING THE MODULE

Page 7 of 7
SOUTHERN PHILIPPINES INSTITUTE OF SCIENCE & TECHNOLOGY # my second home www.facebook.com/spist official 046-471 29 30 0949 927 15 32