Q1-LESSON2-FINANCIAL-SYSTEM.pdf

FINANCIAL Government SYSTEM Financial Institutions Financial Lesson 2 Market Individuals Firms Learning Competency Distinguish a financial institution from fina...

FINANCIAL Government SYSTEM Financial Institutions Financial Lesson 2 Market Individuals Firms Learning Competency Distinguish a financial institution from financial instruments and financial markets (ABM_BF12-11a-2) a. Discuss the financial system and the users of fund b. Compare and contrast the different financial instrument. Financial System The set of global, regional, or firm-specific institutions and practices used to facilitate the exchange of funds. Financial System Financial System: Financial Institution Financial Market Financial Instruments  Financial Institutions Intermediaries that channel the savings of an individuals, business and governments into loans or investments. Financial Institutions Commercial Banks - Individuals deposit funds which use to provide loans to individuals, and purchase debt securities issued by firms or government agencies. Financial Institutions Insurance Banks Commercial Companies - The - Individuals insurance deposit fundscompanies which usepool these to provide payments and invest the loans to individuals, andproceeds purchasein various securitiesissued debt securities until the fundsor by firms are needed to pay off government claims by agencies. policyholders. Financial Institutions Mutual Funds - are owned by investment companies which enable small investors to enjoy the benefits of investing in a diversified portfolio of securities purchased on their behalf by professional investment managers. Financial Institutions Pension Funds - Financial institutions that receive payments from employees and invest the proceeds on their behalf. Other Financial Institutions- include pension funds like Government Service Insurance System (GSIS) and Social Security System (SSS), Unit Investment Trust Fund (UITF), investment banks, and credit unions among others. Financial It is an organized forum in which the suppliers and users of various types of Market funds can make transactions directly. Any market where the buying and selling of securities take place. Financial Market Primary Market Secondary issues new Market securities (either debt or equity) issues previously through a public owned offering or a securities. private placement. Financial Market Money markets are Capital markets are a venue securities wherein wherein securities longer-term with a short- maturities term are sold. maturities (1 year or less) are sold.  It is a real or a virtual document representing a legal agreement involving some sort-of monetary value. Financial Instruments  Preferred Stock has priority over a common stock in terms of claims over the assets of a Equity Instruments company. generally have varied returns based on the performance of the issuing company. Common Stock on the other hand are the real owners of the company. Financial Instruments  Treasury Bonds and Treasury Bills are issued by the Philippine government. Debt Instruments generally have fixed returns due to fixed interest rates. Corporate Bonds are issued by publicly listed companies. Financial Instruments  Directions: Give the comparison and contrast of the Group Activity 3: given topic using Venn Diagram. Group 1 – Commercial banks & Insurance Companies Group 2 – Mutual Funds & Pension Funds Group 3 – Primary Market & Secondary Market Group 4 – Capital Market & Money Market Group 5 – Equity Instrument & Debt Instrument  Thank You ABM Students!