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</p> Signup and view all the answers

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

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

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

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

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

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

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

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

    What is the primary financial goal of a firm?

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

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

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

    How do indirect transfers happen in the capital flow process?

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

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

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

    What is the primary objective of the Bangko Sentral?

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

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

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

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

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

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

    <p>Five</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</p> Signup and view all the answers

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

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

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

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

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