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Questions and Answers
Which type of bank provides services like savings and mortgage banking?
Which type of institution is classified under non-bank financial institutions that involves Pawnshops?
Which financial institution is a government bank dedicated to providing loans for agricultural projects in the Philippines?
Which type of institution among the listed options is a depository financial institution?
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Which government institution is primarily responsible for providing insurance to government employees in the Philippines?
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Which category of non-bank financial institutions focuses on buying and selling of securities in the financial markets?
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What is the yield to maturity of a 10-year, 8% bond purchased at P9,800 with a face value of P10,000?
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If the arithmetic average yield is approximately .83%, what is the geometric average yield?
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What is the internal rate of return (IRR) or yield to maturity of the bond if the exact YTM is computed using the present value at 8% and 9%?
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What does the 642 represent in the yield to maturity (YTM) calculation of the bond?
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What does the rate of return represent?
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In the yield to maturity calculation, what should the present value using the rates 8% and 9% be equal to?
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What does adding .31 to the 8% rate in the yield to maturity calculation signify?
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What is the terminal value of an investment?
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How is expected return defined?
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What does ROI stand for?
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How is the rate of return calculated?
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What is the yield on an investment in government securities representative of?
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What does EV stand for in the formula provided?
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In the formula, what does I represent?
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What is the purpose of the Average Rate of Return (AR) in the provided text?
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Which formula calculates the Average Rate of Return (AR) as an unweighted average?
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How is the return for the month of February calculated?
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If the value of return for March exceeds the value of return for February, how would the return for February be described?
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What does interest rate represent?
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When must the output for Module 4 be submitted?
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What is the relationship between demand for money, velocity of money, interest rates, and prices called?
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What is the main focus of Module 4?
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Which activity is scheduled to take 30 minutes?
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How is interest rate usually expressed?
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Study Notes
Financial Institutions
- Ordinary Commercial Banks
- Universal Banks
- Thrift Banks
- Savings and Mortgage Banks
- Private Development Banks
- Savings and Loan Associations
- Rural Banks
Government Banking Institutions
- Land Bank of the Philippines
- Development Bank of the Philippines
- Al-Amanah Islamic Investment Bank of the Philippines
- United Coconut Planters Bank (UCPB)
- Overseas Filipino Bank, A Savings Bank of LandBank (OFBank)
- UCPB Savings Bank
Non-Bank Financial Institutions
Private Non-Bank Financial Institutions
- Investment Banks/Companies
- Finance Companies
- Securities Dealers/Brokers
- Pawnshops
- Lending Investors
- Fund Managers
- Trust Companies/Departments
- Insurance Companies
Government Non-Bank Financial Institutions
- Government Service Insurance System
- Social Security System
Capital Markets
Financial Intermediation
- Direct and indirect finance
- Depository and non-depository financial institutions
- Role of financial intermediaries
Calculating Yield to Maturity (YTM)
- Formula: F - P + C / n
- Approx. YTM = F + P / 2
- Example: 10-year, 8% bond of P10,000 purchased at P9,800
- YTM ≈ 8.28%
Geometric Average (GA) vs. Arithmetic Average (AA)
- GA: (1 + .0167)(1 + (-.0164))(1 + .0167)(1 + .0082) - 1 ≈ .008218 or .82%
- AA: slightly higher than GA
Internal Rate of Return (IRR)
- Formula: F - P + C / n
- Approx. YTM = F + P / 2
Return on Investment (ROI)
- Formula: EV + I - IV / IV
- Example: Stocks of Bright Corporation
- EV: Ending value of investment
- I: Income received from investment
- IV: Initial value of investment
Average Rate of Return
- Formula: AR = (∑ (RoR)n / n
- Example: Monthly returns
- AR: Average rate of return
- n: Number of intervals
- RoR: Holding period return/yield for each month or year
Determinants of Interest Rates
- Discussion of interest rates
- Theories of interest rate determination
- Determinants of interest rate
- How they affect interest rate
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Description
Explore the different types of financial institutions in the Philippines, including ordinary commercial banks, thrift banks, rural banks, and non-bank financial institutions. Learn about the roles and functions of each institution.
