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Let'S Go Back To The Past: Quiz For The Last Lesson Discussed
Let'S Go Back To The Past: Quiz For The Last Lesson Discussed
THE PAST
Quiz for the last lesson discussed
MOTIVATIONAL ACTIVITY
Role playing to show the difference
between private placement, financial
market, financial institution and financial
instruments
MOTIVATIONAL ACTIVITY
- One will be participant A (saver)and the
other as participant B(user of fund).
- Supposed that A and B met along the
way, B knew that A have excess money
so decided to borrow money to A.
MOTIVATIONAL ACTIVITY
1st scene – A knows that B need funds, or
if B knows that A is willing to invest to the
business, they may agree to make a
Private placement.
MOTIVATIONAL ACTIVITY
2nd scene – A and B can go to a Financial
Market which is an organized forum that lets
A, along with other suppliers of funds, and B,
along with other users of funds, meet and
make transactions. Once A and B have met in
the Financial Market, they can now agree to
make a private placement.
MOTIVATIONAL ACTIVITY
3rd scene – If A and B do not want to make an effort to
find a counterparty in the Financial Markets, A and B
may go to a Financial Institution. A Financial Institution
will receive A’s supply of funds and match it with B’s
demand of funds. Unlike the Financial Markets were A
and B knows to whom the fund went and from whom
the funds came, Financial Institutions serve as an
intermediary to the suppliers and users of funds.
FINANCIAL SYSTEM
DEFINITION OF TERMS
Financial Markets – an organized forums
in which the supplier and user of various
types of funds can make transactions
directly
Private placement – the sale of a new
security directly to an investor or group of
investor
DEFINITION OF TERMS
Financial institution – intermediaries that
channel the savings of individuals,
businesses, and governments into loans
or investment
Financial instrument – is a real or virtual
document representing a legal agreement
involving some sort of monetary value
FINANCIAL INSTRUMENTS
It is composed of the following:
a. Financial asset – it is any asset that is cash, notes
receivables, loans receivables, investment in stock,
investment in bonds
b. Financial liability – it is any liability that is a contractual
obligation such as: notes payable, loans payable, bonds
payable
c. Equity – any contract that evidences a residual interest in
the assets of an entity after deducting all liabilities such as
ordinary share capital and preference share capital
COMMON EXAMPLES OF DEBT AND
EQUITY SECURITY
Debt instruments – it have Equity instruments – have varied
fixed returns due to fixed returns based on the
interest rates performance of issuing company