Professional Documents
Culture Documents
Financial Management
Financial Management
a. Many companies are now on recovery mode, planning for the longer term by strengthening
their operation and having business resilience. (p.89D par 7)
b. Many companies considered optimization of supply chain resilience for long-term
operations, move low-cost production t o other countries, and adapting remote working
environment and have digital infrastructure. (p.89D par.8)
c. Having a new International Treaty for preparedness response in case of the future pandemic.
(p.89D par 9)
Review Questions: Chapter 7
2. Distinguish between public financial markets and corporate financial market.
- Public financial markets are the market where the national, state and local government borrows
funds for public activities while the corporate financial market is where the large corporations
raise their funds. (p.95 par.4)
3. Distinguish between primary market and secondary market.
- Primary market is the original sale of securities by governments and corporations while the
secondary market, known as the Stock Market/Exchange, is where securities can be traded
after it is sold to the public. (p.101)
4. What are the basic functions of the financial markets? Explain them briefly.
- Financial markets act as effective way for the investors to place their money within companies.
Financial markets can be used for risk management, price manipulation, investment, money
transactions, and capital raising for businesses. (p.98-99)
5. What are the two principal sources of funds in the financial market? Explain briefly.
- The two principal sources of funds in the financial markets are debt instruments and equity
instruments. Debt instruments are the most commonly used; bonds or a mortgage are contractual
agreements by the borrower to pay the holder until a specific date. While equity instruments are
claims to share in net income and the assets of a business. (p.100 par 1-2)
6. Distinguish between the organized stock exchange and over-the-counter exchange.
- The organized stock exchange have physical location where the stock buying and selling
transaction happens in the stock exchange floor while the over-the-counter exchange the shares, bonds and
money market instrument are traded using a system of computer screens and telephones. (p.102 par 1-2)
12. What is the implication of the SEC granting a “Self-Regulation Organization” status to the
Philippine Stock Exchange?
- SEC granted the PSE a “Self-Regulatory Organization” SRO status, meaning that the bourse can
implement its own rules and establish penalties on erring trading participants(TPs) and listed companies. (p.105
par. 3)