UNIT ONE

CONCEPT EXAMPLE

FINANCIAL MANAGEMENT:  The A company, M series, wants to get a loan to help them rent
financial management has a financial a working space for the business. The financial
manager must act as an intermediary management team will need to analyze this decision before
between the firm and the financial markets
it turns into action. They will have to weigh their options; the
which are defined as the framework where
will calculate the number of years they want to rent it. And
financial assets are traded.
then, how much they will have to invest in payments to
know if investing that much in that number of years will
strengthen or cripple the business. Furthermore, they can
decide to check the possibilities of even making a whole
space purchase.
CORPORATIVE FINANCE : Corporate Some of the areas of study of corporate finance are, for
finance is the subfield of finance that example: financial balance, the analysis of investment in
deals which how corporations address new assets, the replacement of old assets, mergers and
funding sources, capital structuring, acquisitions of companies, the analysis of indebtedness,
accounting and investment decisions  the issuance of shares and obligations, etcetera.
COF : Chief financial officer, the ● Ensure the correct and timely use of the company's
person in charge of financial planning resources.
and other economic aspects.
● Generate the annual spending budget.

● Project income estimates with historical information

and make periodic balance sheets.

● Prepare the income statement of the company.

● Detects investment opportunities for the company in

the stock market, the market, the public sector and
industry.

● Warn of adverse economic situations of inflation that

could affect the price of products.
TREASURER: A treasurer is a The Secretariat of Administration and Finance of Mexico
corporate position that has as its main City's main interest is to direct the economic policy of the
task the management of monetary City Government in financial, fiscal, spending, income and
funds (money) from an institution, as public debt matters, with the purpose of strengthening this
well as economic movements related capital city with growth cheap quality
to them.

CONTROLLER:  Official who is
● Supervises the annual accounts of the company.
dedicated to reviewing expenses and
official accounts.
UNIT TWO MEXICAN FINANCIAL SYSTEM
FINANCIAL MARKETS: are a type of
marketplace that provides an avenue
for the sale and purchase of assets
such as bonds, stocks, foreign
exchange, and derivatives.
https://corporatefinanceinstitute.com/resou
● Detect errors and financial failures.
● Look for activity monitoring tools.
● Planning of business objectives.
● Management of treasury and funds.
● Economic training for the rest of the company.
● Analysis of strategic decisions
● Establish the mechanisms that enable contact
between the participants in the negotiation.
● Set the prices of financial products based on their
supply and demand.
● Reduce intermediation costs, which allows a greater
circulation of products.
rces/knowledge/trading-investing/financial- ● Manage the liquidity flows of products or markets
markets/ given to others.

Central Bank: It is the institution that

issues and manages the legal currency
and exercises the function of banker of
banks. In addition, it controls the
monetary (money), credit (interest
rates) and exchange (the exchange
rate) systems of the country. 
https://www.banrep.gov.co/es/el-
● Act as a state bank.
● Control the issuance of currency.
● Receive appropriations and grant loans to
commercial banks and the Government.
● Manage the monetary (inflation control) and
financial policy of the country.
● Carry out currency transfers with other countries in
the world, among other functions.

banco/historia/banco-central  

Commercial Banks: A commercial

bank is an entity whose economic
World Bank.
activity is financial intermediation. That
is, it captures deposits from the public, International Fund for Agricultural Development (IFAD)
directing those rsources to the granting European Investment Bank (EIB)
of loans, with the aim of obtaining a
Islamic Development Bank (IsDB)
profit.  
In other words, a commercial bank Asian Development Bank for International Settlements:
receives capital from individuals or fosters international monetary and financial cooperation
companies looking to save. In this way, and serves as a bank for central banks.
funds are raised to later be used for
Financial Stability Council: pursues the efficiency and
granting loans. These banks can
stability of the international financial system.
generate profits due to the interest rate
they charge for the financing granted.
Thus, they not only get back the
borrowed money, but also obtain
additional income. 

https://economipedia.coem/definicione
s/banco-comercial.html   Latin American Reserve Fund: supports the balance of
payments and the harmonization of exchange, financial
and monetary policies of its 8 member countries.Bank
(ADB)
Interest rate: The interest rate is the
amount of money that usually
represents a percentage of the credit
or loan that has been required and that Its calculation is very simple, for example, if a loan of $
the debtor must pay to the borrower. In 1,000 is requested at a nominal rate of 1% per month, the
monthly interest would be $ 10. Then, to know the annual
simple terms; it is the price of the use
rate, the monthly rate (1) must be multiplied by the number
of money.  of months (12), in this way a nominal annual rate of 12% is
obtained.
https://konfio.mx/tips/finanzas/que-es-
la-tasa-de-interes/  
Exchange rate: The exchange rate is The importance of the exchange rate can be seen from all
a reference that is used in the areas of the economy. For example, a person who has the
need or the taste to travel abroad (whether for study, work
exchange market to know the number or vacation) will be interested in knowing how much they
of units of national currency that must will have to pay in domestic currency (pesos) for a unit of
foreign currency of the country to which go to. As most
be paid to obtain a foreign currency, or
international currencies are quoted in dollars, our person
similarly, the number of units of will then be
national currency that are obtained
when selling a unit of currency. foreign
currency. 
interested in how many pesos he will have to pay for one
dollar. Obviously the behavior of the exchange rate may
http://educa.banxico.org.mx/banco_me
benefit or harm this person.
xico_banca_central/sist-finc-tipo-
cambio.html  

Inflation: Inflation is a phenomenon
that is observed in the economy of a
country and is related to the disorderly
increase in the prices of most of the
goods and services that are traded in
its markets, for a prolonged period of
time. 
The prices of all products go up. Suppose you live in a
country where every week the price of all products rises 5
pesos and suppose also that you want to save to buy a cell
phone. For this you have to take into account that the price
of it increases 5 pesos weekly, that is, each week that you
spend more pesos to buy the same cell phone. In this
example, the price rises steadily, that is to say every week,
and is generalized since the prices of all products are
increasing.
http://educa.banxico.org.mx/infografias_y_
fichas/inflacion_infografias_/que-es-
inflacion-como-se-mide.html  

Target rate is the one defined by the

central bank to be used as a reference
Use of the funding rate or overday interbank interest rate is
by financial institutions, and it is
the average rate used by wholesale operations carried out
normally short-term. In Mexico, the
by banks and brokers for operations in term reporting of
overnight interbank funding rate is
one bank business day with debt securities issued by
used.
TESOFE, IPAB, and Banco de México, that is, it is taken
into account when investing in government investment
instruments such as CETES, bonuses, bonuses and
https://www.bbva.mx/educacion-
udibonos
financiera/t/tasa_objetivo.html#

Loans: A loan is an operation in which

an amount of money is transferred and
in exchange the recipient has the
obligation to return it within a specified
period and to pay the agreed
commissions, expenses and interests.
Economic activity hardly works without Some common examples of a money loan contract are: the
bank (when you request a loan) and that of individuals
external financing 
(when a natural person lends you a significant amount of
money and wants to have a guarantee of payment). The
https://www.bankia.es/es/bankademia/
loan contract, which serves to lend any object.
mis-finanzas/finanzas-basicas-
i/prestamos-bankademia/para-que-
sirve-prestamo  

Monetary policy: Monetary policy is

the set of measures adopted by the
monetary authority of a country in Central banks carry out their monetary policy through
adjustments of the money supply, generally in open market
order to seek the stability of the value
operations. For example, they can reduce the volume of
of money and, likewise, avoid money by selling government securities through a "buy-
prolonged imbalances in the balance of and-buy" agreement, thus taking money from commercial
banks.
payments. 

https://www.gerencie.com/politica-
monetaria.html  
FINANCING: is the process of
providing funds for business activities,
making purchases, or investing.
Financial institutions, such as banks,
are in the business of providing capital
to businesses, consumers, and
investors to help them achieve their
When a company borrows money for the short-term or
goals. The use of financing is vital in
long-term, and when a corporation issues bonds or shares
any economic system, as it allows of its common or preferred stock and receives cash, the
companies to purchase products out of proceeds will be reported as positive amounts in the cash
their immediate reach.
https://www.investopedia.com/terms/f/fi and thereby increased the company's cash and cash
nancing.asp
SAVE: is the amount of money left
over after spending and other
obligations are deducted from
earnings. Savings represent money
that is otherwise idle and not being put
at risk with investments or spent on
consumption. Savings accounts are
very safe but tend to offer very low
rates of return as a result.
https://www.investopedia.com/terms
/s/savings.asp
flows from financing activities section of the SCF. A
positive amount informs the reader that cash was received
equivalents.
Business savings are a must for any company that wants
to have a positive income statement. In this sense, apart
from increasing revenues, it will be necessary to reduce
expenses. But we must also bear in mind that any
reduction in expenses does not have to mean medium-
term savings for a company.
An example of outsourcing that would mean savings is to
share commercials between several companies that have
the same public, so the salary and expenses of that
commercial is divided between the companies. For
example, you can think about hiring a commercial with
great experience, which would be impossible to have on
staff if only our company hired him.
INVESTMENT: is a limited amount of
money that is made available to third
parties, a company or a set of shares,
with the aim of increasing the profits
Acquiring a good that reduces expenses, can be the
generated by that business project. purchase of a car, which can well serve to move material
or people, on the other hand a good that generates utility is
https://www.bbva.com/es/que-es-la- the purchase of a property that helps the company with its
inversion/ profitability.