FINANCIAL

INSTRUMENTS
FINANCIAL INSTRUMENT

a contract or document
that represents a financial
value or right to ownership
of an asset.
 PRIMARY INSTRUMENT

Primary financial instruments are those

whose value is derived directly from the
underlying asset or entity. They represent a
direct ownership interest in an asset or a
contractual obligation between parties.
 DERIVATIVE FINANCIAL
INSTRUMENT

derive their value from the performance of

an underlying asset, index, or entity. They
are often used for hedging, speculation, and
risk management purposes.
 Financial Asset
Financial Liabilities

Equity Instrument
Derivatives
FINANCIAL ASSET
is something you own that
derives value from a contract,
like cash, a stock, or a loan
someone owes you.
CASH
physical bills and coins you can
hold, or money readily available
in your bank account.
EQUITY INSTRUMENT
An equity instrument of another
entity is a financial stake you
hold in a company, like a stock
or share.
RECEIVABLE ACCOUNTS
represent money owed to a
business by its customers for
goods or services they've
already received
Cash on Hand
and in Banks
GROUP 2

Chloe T. Cataluña Financial

Laurence Jay Pajes Markets
CLASSIFICATIONS

Petty Cash Fund

Demand Savings and Time Deposit
Undeposited Checks
Foreign Currencies
Money Orders
Bank drafts

Financial
Markets
PETTY CASH FUND

refers to a small amount of money Examples: Office supplies such as

kept on hand by a business for pens, notepads, or paper
minor expenses that arise clips.Refreshments for meetings or
unexpectedly or for small office events.Postage for mailing
purchases where it's impractical letters or small
to use checks or credit cards. packages.Reimbursement for small
It's typically managed by a travel expenses like parking fees or
designated individual within the tolls.
organization and is replenished
periodically. Financial
Markets
DEMAND SAVINGS AND TIME DEPOSITS
Demand savings refers to a type of
savings account where the account
holder can withdraw funds at any
time without any penalty or waiting
period. It offers liquidity and
flexibility, making it suitable for
storing emergency funds or short-
term savings.
Example:
You deposit 10,000 into a demand
savings account. You can withdraw
money whenever you want without
penalties.
Time deposit, on the other hand,
refers to a type of savings account
where funds are deposited for a
specific period, typically ranging from
a few months to several years, at a
fixed interest rate.
Example:
You deposit 10,000 into a one-year. You
agree not to withdraw the money for one
year in exchange for a higher interest
rate. If you withdraw early, you may face
penalties
UNDEPOSITED CHECKS

typically refers to checks that Examples:

have been received by a company A customer pays for goods or services
but have not yet been deposited with a check, but the business owner
into their bank account. forgets to deposit it into the bank for a
These checks are usually few days.
recorded as assets on the
company's balance sheet until
they are deposited. They could
represent payments from
customers, clients, or other
Financial
entities. Markets
FOREIGN CURRENCIES

refers to the currencies of Examples:

countries other than one's
own. They are used in
international trade and
finance for transactions
involving goods, services,
investments, and tourism.
US Dollar (USD)
Euro (EUR)
British Pound (GBP)
Japanese Yen (JPY)
Swiss Franc (CHF) - Switzerland

Financial
Markets
MONEY ORDERS

is a payment method similar to a Example:

check, where a prepaid amount is Recipient's Name: John Smith
specified by the purchaser. Amount: $150.00
Money orders are typically issued Memo (optional): Rent for April 2024
by banks, post offices, or other Your Name: Juan Dela Cruz
financial institutions.
They are often used as a secure
form of payment for transactions
where personal checks or cash
are not accepted or where the
Financial
payee requires guaranteed funds. Markets
BANK DRAFTS

is a secure form of payment issued by a bank on

behalf of a payer, guaranteeing payment to the
recipient. It's like a check, but the bank guarantees
the funds.

Financial
Marktes
-END-

Financial
Markets
(B) DEBT-BASED
FINANCIAL
INSTRUMENTS
CARVAJAL & GOCELA
 (B) ACCOUNTS, NOTES AND LOANS RECEIVABLE AND
INVESTMENTS IN BONDSAND OTHER DEBT INSTRUMENTS
1. TRADE RECEIVABLES (SIGNED
DELIVERY RECEIPTS ISSUED SECONDARY
BY OTHER ENTITIES) OBJECTIVES
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 1. TRADE RECEIVABLES
(SIGNED DELIVERY
RECEIPTS ISSUED
BY OTHER ENTITIES)
are defined as the amount owed
to a business by its customers
following the sale of products or
services on credit.
2. PROMISSORY
NOTES
is a legal document that outlines a
promise to repay a debt. It serves as
a written agreement between a
borrower and a lender, detailing the
terms and conditions of the loan,
including the amount borrowed, the
interest rate (if any), the repayment
schedule, and any other relevant
terms.
3. BOND
CERTIFICATES
is a legal document that serves as
evidence of ownership of a bond.
Bonds are debt securities issued
by governments, corporations, or
other entities to raise capital.
When an investor purchases a
bond, they receive a bond
certificate as proof of their
investment.
C. INTEREST IN SHARES OR
OTHER EQUITY
INSTRUMENTS ISSUED BY
OTHER ENTITIES
1. STOCK CERTIFICATES
COMMON STOCK
PREFERRED STOCK
2. PUBLICLY LISTED SECURITIES
Appreciated shares
Debt obligations or rights that are listed on a
prescribed stock exchange
Mutual fund units, or shares
Units in segregated fund trust
Derivatives Financial Instruments

Derivatives – are financial instruments that “derive” their value on contractually required cash flows
from some other security or index.

Future contracts – is an agreement between a seller and a buyer that requires that seller to deliver a
particular commodity at a designated future date, at a predetermined price.

Forward contracts – is a customizable derivative contract between two parties to buy or sell an asset at a
specified price on a future date. Forward contracts can be tailored to a specific commodity, amount, and
delivery date.
Call Options
Foreign Currency Futures
Interest Rate Swap
BY: JULIET LIBRE & MARC ANTHONY MALCONTENTO
Call Options
A call option gives the holder the right, but not the obligation, to buy an underlying asset at a
specified price within a predetermined period of time.
The underlying asset could be stocks, commodities, currencies, or even other derivative
products.
Call options may be purchased for speculation or sold for income purposes or tax management.
Call options may also be combined for use in spread or combination strategies.
Foreign Currency Futures
Foreign currency futures are derivative financial instruments that allow investors to buy or sell a
specified amount of a particular currency at a predetermined price (exchange rate) on a
specified future date. These futures contracts are standardized agreements traded on organized
exchanges, such as the Chicago Mercantile Exchange (CME) or the Intercontinental Exchange
(ICE).
Foreign currency futures provide a standardized and regulated marketplace for participants to
manage currency exposure and take positions on future exchange rate movements. However,
like all derivative products, they involve risks and require a thorough understanding of market
dynamics, currency fundamentals, and trading strategies.
Interest Rate Swap
An interest rate swap is a type of derivative financial asset in which two parties agree to
exchange interest rate cash flows over a specified period.
These swaps are commonly used to manage or hedge exposure to fluctuations in interest rates.
They allow parties to transform their existing interest rate obligations from one form to another,
typically from fixed to floating rates or vice versa.
End