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Questions and Answers
What characterizes a Fixed Deposit?
What defines a Current Deposit?
Which factor is essential for a bank to accept deposits?
How are Deposit Substitutes used by banks?
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What is typically associated with a Bull Market?
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Which of the following accurately describes a Savings Deposit?
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What is meant by Loan in the context of banking?
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What is the role of the Philippine Deposit Insurance Corporation (PDIC)?
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What does the term 'commodatum' refer to in financial terms?
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What is meant by 'quasi banking functions'?
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Which type of bank is defined as having its deposits insured?
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What market is specifically designated for trading debt instruments?
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Which of the following represents the first real public bank?
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The term 'financial intermediaries' refers to which of the following?
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Which of the following statements correctly describes money as a medium of exchange?
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What defines the 'scarcity' of a resource in economic terms?
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What is the definition of 'insured deposit'?
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Which feature of money allows it to be broken down into smaller units?
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Which year marks the establishment of the first Filipino bank?
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In the context of the financial market, what does 'secondary market' refer to?
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What is the purpose of 'transfer deposit'?
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What does 'recurring deposit' involve?
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What is a 'warehouse receipt' in financial terms?
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Who established the first government bank in the Philippines?
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What defines a personal check?
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What is indirect finance commonly associated with?
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What does seigniorage refer to in the context of government finance?
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Which best describes a cashier’s check?
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What differentiates a business check from a personal check?
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What is meant by local drafts in finance?
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How can plastic money be described?
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What characterizes public finance?
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What is the primary function of a cooperative?
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What does effective working capital management primarily focus on?
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Which type of partner is only liable for partnership debts up to the extent of their interest?
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What is the ultimate objective of any business according to the content?
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What is the main goal of effective investment decisions?
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What does proper asset selection involve?
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What are undesirable consequences of ineffective inventory management?
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What does accounting primarily deal with?
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Study Notes
Early Banking History
- The first real public bank was Banco della Piazza di Rialto, founded in Venice.
- Other early public banks include the Bank of Deposit in Barcelona (1401) and Casa di Giorgio in Genoa (1407).
- Pious works were funded by rich and religious citizens in the Philippines during the Spanish Era, and managed by confraternities.
- The arrival of Governor Jose Basco Y Vargas in 1778 paved the way for economic development in the Philippines.
- Francisco Rodrigues founded the first Filipino bank in 1830, named RODRIGUEZ BANK.
- The first government bank in the Philippines was established in 1851 by Governor Antonio de Urbiztondo, called Banco Espanol-de Urbiztondo; now known as the Bank of the Philippine Islands (BPI).
The Philippine Deposit Insurance Corporation (PDIC)
- PDIC safeguards depositors' interests.
- Depositors are protected from losses, up to P500,000 per depositor, per insured bank.
Definition of Terms
- Insured Deposit: The net amount due to any depositor for deposits in an insured bank, less any amount exceeding P500,000.
- Transfer Deposit: A deposit made available to a depositor by the Corporation as payment of an insured deposit.
- Trust Funds: Funds held by an insured bank in a fiduciary capacity, such as trustee funds.
Types of Bank Deposits
- Recurring Deposit: A fixed amount of money deposited for a specific period of time.
- Fixed Deposit: A deposit repayable after a specific expiry period, determined at the time of account opening.
- Savings Deposit: Deposits for individuals wishing to deposit small amounts from their current income.
- Current Deposit: Also known as demand deposit; can be withdrawn by the depositor at any time using checks.
Banking Definitions
- Deposit: Constituted the moment a person receives something belonging to another with the obligation to safely keep it and return it.
- Deposit Money: All liabilities of the BSP and banks denominated in Philippine currency and subject to payment in legal tender.
- Deposit Substitutes: Alternative forms of obtaining funds from the public, other than deposits, through the issuance, endorsement, or acceptance of debt instruments.
- Loan: One party delivers something not consumable to another, who may use it for a certain time and return it.
- Commodatum: A contract where the borrower uses something not consumable for a certain time and returns it.
- Commercial Bank: A corporation that accepts or creates demand deposits subject to withdrawal by check.
- Bank Reserves: Currency deposits that are not lent out to a bank's clients.
Financial Markets
- Stock Market: A place where stocks are bought and sold.
- Stocks: Units of ownership in a company.
- Bull Market: The economy is strong, and stock prices are rising.
- Bear Market: The economy is weak, and a recession is looming.
- Financial Markets: Operate to provide a better perspective for decision-making relating to the finance function.
- Primary Market: Where newly issued securities are traded for the first time.
- Secondary Market: Where existing financial securities are traded.
- Capital Market: A part of the financial market where trading is undertaken for securities with a maturity of more than one year.
- Bond Market: The market for debt instruments of any kind.
Money Types and Definitions
- Money: A medium of exchange, standard of value, and store of value.
- Prepaid cash/gift card/certificate: Can be given as a gift, allowing recipients to choose what they want to purchase.
- Medium of Exchange: Money used to facilitate the transfer of goods and services and to settle obligations.
- Standard of Value: Goods, services, assets, liabilities, and net worth are all measured in terms of money.
- Scarcity: Makes something valuable; overabundance makes it worthless.
- Divisibility: Must have the quality of being broken down into smaller units.
- Personal Checks: Issued by individuals to be drawn against their own current accounts.
- Business Checks: Issued by business organizations.
- Cashier's Check: A check treated as a bank draft, issued by the bank against its own account.
- Certified Check: A cashier's check issued by the bank certifying that the issuer's account has available funds.
- Traveler's Checks: Prepaid fixed amounts that operate like cash; purchased for use to buy goods or services when traveling.
- Demand Draft: Payable on demand.
- Time Draft: Payable sometime in the future; like a post-dated check.
- Local Draft: Issued by a bank in a single country for local transactions only.
- Money Order: An instrument issued by the post-office of a country ordering a sum of money to be paid to the payee indicated on the instrument.
- Warehouse Receipt: A document of title for goods; proof of possession and control of the goods.
Finance and Accounting Definitions
- Finance: Deals with sources and uses of funds.
- Accounting: Deals with recording financial transactions to determine the results of operations and financial conditions.
- Profit Maximization: The ultimate objective of any business firm, as it increases owner’s wealth and the value of the company.
- Accounting for Profits: A measure used by managers and owners to evaluate the performance of firms.
Business Structures
- Sole or Single Proprietorship: A solo business.
- Partnership: Two or more individuals in business.
- Cooperative: A legal business structure owned and governed by, and functions for, the benefit of those who use its services.
- General Partner: Debts are up to the extent of their personal assets.
- Limited Partner: Liable for partnership debts only up to the extent of their interest.
- Capitalist Partner: Contributes money and non-cash assets.
- Industrial Partner: Contributes skills or expertise to the business.
Management Definitions
- Efficiency: A measure of speed and cost.
- Effectiveness: A measure of quality.
- Effective Working Capital Management: Managing both current assets and current liabilities, maintaining the right combination to enjoy a good working capital position.
- Effective Inventory Management: Overstocking and understocking are undesirable.
- Effective Investment Decisions: Investing excess funds to create additional income.
- Proper Asset Selection: Selecting machinery and equipment necessary for the company's operation.
- Growth in Sales: Additional investment in assets which, in turn, requires additional capital or funding.
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Description
Explore the foundations of early banking history, including key establishments like Banco della Piazza di Rialto and the first Filipino bank, Rodriguez Bank. Learn about the role of the Philippine Deposit Insurance Corporation in protecting depositors' interests, ensuring up to P500,000 per person. This quiz provides insights into both historical and modern banking practices.
