Lesson 9

• Banks


  • financial institutions that are licensed to accept deposits from the public and create credit. They also provide loans, mortgages, and other financial services.

  • typically heavily regulated by government authorities to ensure stability and protect depositors' funds.
• Examples of Banks


  • JP Morgan Chase

  • Bank of America

  • Wells Fargo

  • Federal Reserve in the United States

  • European Central Bank in the Eurozone

  • BPI

  • Metrobank

  • Landbank

  • Union Bank
• Non-banks


  are financial institutions that provide financial services but do not hold a banking license or operate as traditional banks.
• Non-banks


  • may offer services similar to banks, such as lending, investment management, insurance, and payment processing.

  • usually less regulated compared to banks, but they still operate within the framework of financial regulations.
• Investment Banking


  • Goldman Sachs

  • Morgan Stanley
• Insurance Companies


  • Allstate

  • Prudential

  • Prulife

  • Sunlife
• Example of Non-banks


  • Investment Banking

  • Insurance Companies

  • Peer-to-peer lending platforms

  • Paymeny Processors
• Payment Processors


  • PayPal

  • Gcash

  • PayMaya
• Debt


  • represents funds borrowed by a company or individual that must be repaid over time, typically with interest.

  • typically involves fixed payments; with interest and principal.
• Equity


  • represents ownership in a company and is often referred to as stock or shares.

  • become shareholders

  • Entitled to a portion of the company's profits

  • Entitled to a voting rights in certain matters
• Equity


  involves ownership in a company with potential returns coming from dividends and capital appreciation.
• Debt


  involves borrowing funds that must be repaid with interest
• Debt Financing


  involves borrowing money from external sources.
• Equity Financing 


  involves raising capital by selling ownership stakes in the company to investors, who become share holders or equity holders
• Formula for Simple Interest


  Is = Prt
• Maturity Value or Future Value

  F = future value

  P = principal

  Is = simple interest
• Formula for Maturity Value (Simple

  Interest)


  F = P+ Is

  F = P + (1 + rt)
• Compound Interest

  F = future value

  P = principal

  Ic = compound interest
• Formula for Maturity Value (Compound Interest)


  F = P(1 + r)^t
• Compound Interest


  Ic = F - P