ACTIVITY 5
1. WHAT IS FINANCE?
Are monetary resources comprising debt and
ownership funds of the state, company or person
2. WHAT IS FINANCIAL SYSTEM?
Is to make a relationship between the different
stakeholders like the savers, investors, lenders for borrowers and other market
participants who are existing in this particular system and are made of
different intricate and complex models that link financial institutions to provide
financial services for various stakeholders operating in the financial system
like depositors, lenders borrowers, government and others
3. WHAT ARE THE FUNCTIONS OF A
FINANCIAL SYSTEM?
Deals with financial transactions and the
exchange of money between savers, investors, lenders and borrowers. Basically,
provide the financial services. It takes care of both short-term and long-term
needs of the market participants. It supplies the required financial capital to
government for public expenditure on the social welfare activity infrastructure
development
4. HOW ARE THE MAIN TYPES OF FINANCIAL
INSTITUTIONS CATEGORIZED? DESCRIBE EACH ONE.
·
Intermediaries’ vs Non-Intermediaries: They lend money as well as mobilize savings,
non-intermediaries’ institutions do then lean business, but their resources aren’t
directly obtained from savers
·
Banking and Non-banking: Banks provide transactions services, subjects to legal reserve
requirements.
5. WHICH ARE THE MAIN CLASSES OF
FINANCIAL INSTRUMENTS ISSUED IN A FINANCIAL SYSTEM? DESCRIBE THEM IN DETAIL.
·
Cash instruments: the values of cash instruments are directly influenced
and determined by the markets. These can be securities that are easily transferable
·
Derivative Instruments: There can be OTC derivatives or exchange-traded
derivatives. OTC is a market or process whereby securities-that aren’t listed
in formal exchanges-are priced and traded.
6. WHAT ARE THE DISTINCTIONS BETWEEN
VARIOUS TYPES OF FINANCIAL MARKETS ACCORDING TO THEIR FUNCTION? EXPLAIN THEM.
·
Money and Capital Markets: this is conventional distinction is based on the differences in the period
of maturity of financial assets issued in these markets
·
Primary and Secondary Markets: Primary markets deal in the new financial
claims or new securities, second market deal in securities already issued or
existing or outstanding
7. WHAT DOES THE “FLOW OF FUNDS” REFER
TO? EXPLAIN IN DETAIL.
Flow of funds (FOF) are national financial accounts that track the
movement of money among industries or sectors of the economy. Figures measuring
the scale and scope of flow of funds in a nation's economy are collected and
disseminated by the central bank for economic analysis.
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ResponderBorrarHi, Cecilia! I read your work, I can see that you wrote about the main types of financial institutions, I added these: Money Market, Capital Market, Primary and Secondary Markets, but actually you summarized in a few words the meaning of financial institutions Banking and Non-banking and Intermediaries’ vs Non-Intermediaries in the greatest way.
ResponderBorrarIf I can talk about the main classes of financial instruments, I would say something relative to: Money Market, Capital Market, Foreign exchange market and in addition to this: ´financial instruments may also be divided according to an asset class, which depends on whether they are debt-based or equity-based´. What do you think?
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ResponderBorrarHi Cecy! The information in your task is very organized and clear, we have very similar responses.
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ResponderBorrar