LGU Bonds and Local Government Development

Which type of securities are traded in capital markets?

Debt and equity securities

What is the typical maturity period for long-term securities in capital markets?

More than a year

Who are the major suppliers of stocks in the capital market?

Corporations for stocks and government for bonds

What characteristic makes long-term securities riskier in comparison to short-term instruments?

Greater default and market risks Signup and view all the answers

Which market is considered part of the capital markets along with stock and bond markets?

Mortgage market Signup and view all the answers

What distinguishes capital markets from money markets?

Duration of securities maturity Signup and view all the answers

What is the function of Treasury Notes and Bonds?

To be backed by the government's full faith and credit Signup and view all the answers

Which bond type sells at a discount?

T-bills Signup and view all the answers

What type of price risk are Treasury Notes and Bonds subject to?

Interest rate risk Signup and view all the answers

What is the purpose of the Bond Market?

Issuing and trading bonds Signup and view all the answers

How are T-notes and T-bonds different from T-bills?

They pay interest semi-annually Signup and view all the answers

When are T-notes and T-bonds considered to be risk-free investments?

When they are backed by the government's credit Signup and view all the answers

What is the main purpose of LGU bonds in the Philippines?

To attract private institutional capital for development programs Signup and view all the answers

What does a bond indenture typically specify?

Term of the bond and interest rates Signup and view all the answers

How are derivative securities defined?

Securities whose value is derived from other traded securities Signup and view all the answers

What is the primary function of derivative securities market?

Trading derivative securities linked to underlying securities Signup and view all the answers

Why are LGU bonds considered a potential tool for development?

To reduce reliance on the national government for program implementation Signup and view all the answers

In what way do LGU bonds differ from corporate bonds?

LGU bonds are short-term, while corporate bonds are long-term Signup and view all the answers

Where does a one-on-one transaction take place between a borrower and a lender?

Loan market Signup and view all the answers

In which market are big loans secured using real property, buildings, or big machineries?

Mortgage market Signup and view all the answers

Where does the trading involve an independent third party matching prices on orders received to buy and sell a particular security?

Auction market Signup and view all the answers

Which market provides the structure for exchanging money between different countries and determining exchange rates?

Foreign exchange market Signup and view all the answers

What type of contracts give the holder the right to buy something in the future at a specified price?

Forward contracts Signup and view all the answers

What are agreements between two parties for exchanging periodic cash flows based on an underlying instrument or price?

Swaps Signup and view all the answers

What is the main difference between the spot market and the futures market?

Futures market involves trading contracts, while spot market involves immediate purchase of assets. Signup and view all the answers

What type of contracts are traded in the forward market?

Contracts involving future delivery of assets Signup and view all the answers

In which markets can forward contracts be found?

In the commodity, foreign currency, and interest rate markets Signup and view all the answers

Where are stock options traded?

In the options market Signup and view all the answers

When is a stockholder given stock options by a corporation?

When they want to maintain their ownership proportion in the corporation Signup and view all the answers

What happens if a stockholder does not want to exercise their stock options?

They can sell the options in the options market Signup and view all the answers