Financial Systems and Institutions

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What is the primary function of debentures in companies?

To raise long-term finance (correct)
To raise short-term finance
To allocate assets
To manage investment portfolios

What is the main goal of portfolio management in investment?

To separate ownership and management
To allocate assets equally
To minimize risk and maximize returns (correct)
To optimize investment style

What is the primary characteristic of a competitive market in investment?

Risk and returns are optimized (correct)
Only active investment is allowed
Risk-taking is discouraged
Investment styles are limited

What is the role of financial intermediaries in investment management?

To channel funds between lenders and borrowers (B) Signup and view all the answers

What is the key concept in investment management that deals with agency issues?

Separation of ownership and management (A) Signup and view all the answers

What is the primary goal of investment management in a financial institution?

To channel funds by means of financial intermediaries (C) Signup and view all the answers

Which entity is considered to be always in a shortage of funds?

Government (A) Signup and view all the answers

What is the primary function of financial intermediaries in the economy?

To position between debtors and creditors (B) Signup and view all the answers

What is the likely outcome of a lively financial system on the production of goods and services?

Increased production due to suitable interest rates (A) Signup and view all the answers

Which of the following is NOT a key player in financial systems?

Individual Investor (B) Signup and view all the answers

What is the relationship between savings and investment in a lively financial system?

More savings lead to more investment (C) Signup and view all the answers

What is the likely outcome of more manufacturing companies having access to working capital?

Increased employment opportunities (C) Signup and view all the answers

What type of industry can prospective venture capitalists fund and employ more workers in?

Technology-based industry (A) Signup and view all the answers

What type of financial instruments are issued by capital markets to attract investment?

Debentures and shares (A) Signup and view all the answers

What type of financial assistance is provided by foreign exchange markets?

Forex requirements for international trade (A) Signup and view all the answers

What type of financing is provided by financial institutions to support domestic and international trade?

Letters of credit and financing (B) Signup and view all the answers

What type of countries can achieve financial prosperity through financial institutions, according to the text?

Countries not dependent on natural resources (C) Signup and view all the answers

What is the benefit of short-term loans provided by financial institutions?

Supporting the continuity of daily business operations (A) Signup and view all the answers

What is the primary purpose of establishing development banks and merchant banks in economic liberalization?

To raise funding for infrastructure buildings (B) Signup and view all the answers

What is the role of venture capitalists in the financial system?

To invest in highly risky information and technology businesses (B) Signup and view all the answers

What is the primary function of the Bangko Sentral ng Pilipinas in the financial system?

To regulate the financial system (A) Signup and view all the answers

What is one of the benefits of a vigorous financial system in attracting foreign investment?

Providing more investment prospects (A) Signup and view all the answers

What is one of the outcomes of economic integration among proximal countries or regions?

A common currency and investment trade practice (D) Signup and view all the answers

What is one of the benefits of a balanced financial system in regional development?

Promoting regional development (A) Signup and view all the answers

What is the primary function of the financial system?

To facilitate the interaction between investors and savers (C) Signup and view all the answers

What is a financial asset, according to the financial system?

Someone else's liability (D) Signup and view all the answers

Which of the following is a characteristic of financial assets?

They are greatly affected by inflation (A) Signup and view all the answers

What are the two main markets for trading financial instruments?

Money market and capital market (A) Signup and view all the answers

What is the term for the five investment assets traded in the market?

Investment classes (B) Signup and view all the answers

What is the definition of a financial derivative?

A financial instrument whose value is derived from another instrument (B) Signup and view all the answers