A type of interestdeducted in advance fromloan availment
Interest Rate
For the lender's viewpoint, it is price of the loanable funds
Links the future tothe present and, in essence, it is the market price of earlier availability
Money
Any item or commodity that is generally accepted as a means of payment for goods and services or for payment of debt
Money Aggregates
M1: Narrow Money
M2: Broad Money
M3: BroadMoney Liabilities
M4: Liquidity Money
Parties to a check
Payee
Drawee
Drawer
PhilpaSS (or Philippine Payment and Settlement System)
The name of RTGS payment system in the Philippines
Present Discounted Value
The other name of the concept of present value which is based on the common sense that a peso of cash paid to you one year from now is less valuable to you than a peso paid to you today
Real Time Gross Settlement (RTGS)
An electronic form of funds transfers where the transmission takes place on a real time basis
Time value of money
The concept "that a sum of money is worth more now than the same sum will be at a future date due to its earning potential in the interim"
Adverse Selection
Problem investors experience in distinguishing low-risk borrowers from high-risk borrowers before making an investment
Authorized Shares
The maximum number of shares that a corporation may issue without amending its charter
Bangko Sentral ng Pilipinas
Regulates the banks in the Philippines
Blue chip stocks
Involves investing in blue chips stocks because of their stable and high potential for profits
Bond Certificate
Tangible evidence of debt issued by a corporation or a governmental body and represents a loan made by investors to the issuer
Capital Market
A financial market in which longer-term debt (original maturity of one year or greater) and equity instruments are traded
Clearing House
An institution where stockbrokers will make payments to and receive payments for purchases and sales they have made for their clients. Simultaneously, all stock certificates will be delivered to and obtained from this central institution. An example of this institution in the Philippines is the Securities Clearing Corporation of the Philippines (SCCP)
Credit quality risk
The chance that the bond will not be able to make timely payments
Credit rating
An evaluation of the credit risk of a prospect debtor, predicting their ability to pay back the debt, and an implicit forecast of the likelihood of the debtor defaulting
Coupon Interest Rate
A feature of the bond certificate stating the percentage of the par value of the bond that will be paid out annually in the form of interest
Debt Instruments
A contractual agreement by the borrower to pay the holder of the instrument fixed peso amounts at regular intervals (interest and principal payments) until a specified date (the maturity date), when a final payment is made
Default Risk
The chance that a borrower would not be able to make require debt payment to a lender
Economies of Scale
Refers to the reduction in average cost that results from an increase in the volume of a good or service produced
Financial Instrument
Any contract that gives rise to a financial asset of one entity and a financial liability orequity instrument of another entity
Financial Markets
The meeting place of people, corporations and institutions that either need money or have money to lend or invest
Financial Services
Brokerage, credit cards, payments services, taxes and accounting and investment funds are examples of what component of financial system
Financial System
Consists of all financial intermediaries and financial markets and their relations with respect to the flow of funds to and from households, governments, business firms and foreigners, as well as the financial infrastructure
Listing
Admission of securities to dealings on a recognized stock exchange of any incorporated company, quasigovernmental and other financial institutions/corporations
Money Market
Refers to the network of corporations, financial institutions, investors and governments which deal with the flow of short-term capital
Mutual Funds
Professionally managed bonds, stocks, and other investment products consisting of a pool of money collected from various investors used to invest in different assets
Outstanding Shares
Equity shares held by the public
Paid In Capital
Total amount received by a company from the issuance of common or preferred stock
Portfolio
Collection of financial investments like stocks, bonds, commodities
Risk
The chance that the value of financial assets will change relative to what one expects
Securities Clearing Corporation of the Philippines (SCCP)
The central securities clearing institution in the Philippines
Securities Dealer
Any person or entity engaged in the business of buying and selling securities for his own or its client's account thereby making a profit from the difference between the purchase prices and selling price of securities
Securities and Exchange Commission
Regulates mutual funds companies
Securitization
The pooling of various types of debt instruments (such as mortgages and consumer loans) and selling them as bonds to investors
Stock Exchange
An organized secondary market where securities like shares, debentures of public companies, government securities and bonds issued by public corporations are purchasedandsold
Yield
The income the investors receive while owning an investment