Financial Institutions Overview
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Questions and Answers

In which market are preowned securities traded?

  • Secondary market (correct)
  • Private market
  • Public market
  • Primary market

What type of market involves negotiations directly between two or more parties?

  • Public market
  • Primary market
  • Secondary market
  • Private market (correct)

Which type of financial institution helps companies raise capital by designing attractive securities for investors?

  • Commercial banks
  • Investment banks (correct)
  • Central banks
  • Retail banks

What does a corporation not receive in a secondary market transaction?

<p>Funds (A)</p> Signup and view all the answers

Where are standardized contracts like common stock and corporate bonds traded?

<p>Public markets (B)</p> Signup and view all the answers

What is the main role of financial institutions in the economy?

<p>Channeling savings into loans or investments (A)</p> Signup and view all the answers

Which type of financial institution is known for administering pension funds primarily?

<p>Life insurance companies (B)</p> Signup and view all the answers

Which type of financial institution is described as a cooperative association with members sharing a common bond?

<p>Credit unions (B)</p> Signup and view all the answers

Where do commercial banks get securities that they resell to savers?

<p>From the corporation (B)</p> Signup and view all the answers

Which financial institutions combine various financial entities under one corporate umbrella?

<p>Financial services corporations (A)</p> Signup and view all the answers

Where do life insurance companies invest the funds they collect from clients' annual premiums?

<p>Stocks, bonds, real estate, and mortgages (C)</p> Signup and view all the answers

Which institutions are known for accepting money from individual or corporate savers and investing in various financial instruments?

<p>Mutual funds (B)</p> Signup and view all the answers

What is the primary financial goal of a firm?

<p>Maximize shareholders' wealth (D)</p> Signup and view all the answers

In the capital allocation process, what happens in direct transfers?

<p>Business sells securities directly to savers (A)</p> Signup and view all the answers

What is the role of an underwriter in the capital allocation process?

<p>Facilitating the issuance of securities (B)</p> Signup and view all the answers

How do indirect transfers happen in the capital flow process?

<p>Investment bank sells securities to savers (A)</p> Signup and view all the answers

Which type of firms mainly use direct transfers in the capital allocation process?

<p>Small firms (C)</p> Signup and view all the answers

What risks does an investment bank face in indirect transfers?

<p>Risk of not being able to resell securities to savers (D)</p> Signup and view all the answers

What is the primary objective of the Bangko Sentral?

<p>Promote and maintain monetary stability (B)</p> Signup and view all the answers

Who appoints the members of the Monetary Board of the Bangko Sentral?

<p>President of the Philippines (D)</p> Signup and view all the answers

What is the term length for members of the Monetary Board?

<p>Six years (A)</p> Signup and view all the answers

How many members of the Monetary Board come from the private sector?

<p>Five (B)</p> Signup and view all the answers

Which law recognized the vital role of banks in providing an environment conducive to national economic development?

<p>The General Banking Law of 2000 (C)</p> Signup and view all the answers

Who is designated as a member of the Cabinet on the Monetary Board?

<p>Secretary of Finance (A)</p> Signup and view all the answers

What entity can be authorized to engage in quasi-banking functions?

<p>Universal and commercial banks (A)</p> Signup and view all the answers

How does the Monetary Board determine if a person or entity is performing banking functions without authority?

<p>By examining the organization of the bank (A)</p> Signup and view all the answers

What is a key requirement for an entity to be authorized to operate as a bank or quasi-bank?

<p>Obtaining funds from the public (C)</p> Signup and view all the answers

What authority does the Bangko Sentral have during the examination of a bank?

<p>Authority to examine related enterprises (C)</p> Signup and view all the answers

Which classification of banks is mentioned in 'The General Banking Law of 2000'?

<p>Universal and commercial banks (D)</p> Signup and view all the answers

What must be satisfied for the Monetary Board to authorize the organization of a bank or quasi-bank?

<p>Meeting specific regulatory criteria (A)</p> Signup and view all the answers

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