16 Questions
What is the main characteristic of direct lending?
Funds transferred without an intermediary
Which of the following is an example of direct financing method?
Private placements
What is the role of an investment banker?
Provide financial advice and underwrite new securities
Which element/component of the Philippine financial system involves the buying and selling of stocks, bonds, and other securities?
Financial market
What is one of the main functions of the financial system mentioned in the text?
Providing payment mechanisms
Which sector of the economy gets credit from the financial system for borrowing and lending?
Household, business, and government
What advantage does the financial system offer in terms of risk sharing?
Sharing risks between savers and borrowers
What is liquidity in the financial system context?
The ease of exchanging assets for money
Which market deals with low-risk debt instruments that mature in one year or less?
Money Market
Where is the Deutsche Bundesbank located?
Frankfurt, Germany
What is the main responsibility of the Bangko Sentral ng Pilipinas?
Regulating Banks
In which market are bond and equity shares with long-term maturities traded?
Capital Market
What is the main responsibility of the Bangko Sentral ng Pilipinas (BSP) according to the text?
Formulating monetary policies
Who was the first Governor of the Bangko Sentral ng Pilipinas (BSP)?
Miguel Cuaderno Sr.
What is one of the objectives of the BSP as mentioned in the text?
Maintaining stable prices for economic growth and employment
When was the BSP established according to the text?
July 3, 1993
Study Notes
Financial System
- Direct lending is characterized by a direct financial relationship between the lender and the borrower.
Financing Methods
- An example of a direct financing method is borrowing from friends and family.
Investment Banker's Role
- An investment banker acts as an intermediary between issuers of securities and investors.
Philippine Financial System
- The capital market is the element of the Philippine financial system that involves the buying and selling of stocks, bonds, and other securities.
Functions of the Financial System
- One of the main functions of the financial system is to facilitate the transfer of funds from savers to borrowers.
Financial System Sectors
- The household sector of the economy receives credit from the financial system for borrowing and lending.
Risk Sharing
- The financial system offers the advantage of risk sharing by allowing companies to share their risks with investors.
Liquidity
- In the financial system context, liquidity refers to the ability to convert assets into cash quickly and at a low cost.
Money Market
- The money market deals with low-risk debt instruments that mature in one year or less.
Deutsche Bundesbank
- The Deutsche Bundesbank is located in Germany.
Bangko Sentral ng Pilipinas (BSP)
- The main responsibility of the Bangko Sentral ng Pilipinas (BSP) is to maintain price stability and promote a healthy financial system.
- The BSP is responsible for regulating and supervising banks and other financial institutions.
Capital Market
- The capital market is where bond and equity shares with long-term maturities are traded.
BSP Objectives
- One of the objectives of the BSP is to promote a healthy financial system.
BSP History
- The Bangko Sentral ng Pilipinas (BSP) was established in 1993.
- The first Governor of the Bangko Sentral ng Pilipinas (BSP) was Miguel Cuaderno.
Learn the distinctions between money market and capital market, including examples of instruments found in each. Explore the role of Deutsche Bundesbank as the central bank of Germany.
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