FINMAR

• An important process to ensure that profit and wealth is maximized.

  Financial Management
• Used as an indicator for the purchasing power of a locality.

  Minimum wage
• Finance is often referred to as____

  Financial economics
• • Deals in providing quantitative information, primarily financial in nature, it is necessity for these disciplines to have an integration.
  • Requires in-depth analysis of financial results and underlying transactions to provide reasonable recommendations.

  Accountancy
• • A key player in ensuring continuity of operations.
  • Life-blood of the company
  • Application of economic principles to decision-making that involves the allocation of money under conditions of uncertainty
  • Provides the framework for making decisions as to how those funds should be obtained and then invested.

  Finance
• • Provides the platform by which funds are transferred from those entities that have funds to invest to those entities that need funds to invest.

  Financial System
• Allows households, companies and the government who have available funds to invest these funds in more potentially productive vehicles that can result in faster growth in the economy.

  Financial System
• Encourages fund savings from its stakeholders and transforms these savings efficiently into investment vehicles to help the economy grow faster.

  Financial System
• Set of arrangements or conventions embracing the lending and borrowing of funds by non-financial economic units and the intermediation of this function by financial intermediaries.

  Financial System
• Composed of network of inter-related systems of financial markets, intermediaries and services.

  Financial System
• Finance came from the french word "_____" which means?

  Finer - to end and settle a debt
• Serve as a regular, time-efficient and cost effective link between fund providers and fund demanders.

  Financial System
• Funds can flow in how many routes? and what are they?


  Two routes - Direct Financing and Indirect Financing
• The borrower-spenders borrow and deal directly with suppliers or lenders through selling financial instruments (or securities)

  Direct Financing
• Represent claims on the future income or assets of the borrower

  Financial instruments
• Recognize financial instruments as liabilities.


  Borrowers
• Recognize financial instruments as an asset


  Lenders
• the borrowing activity between both parties still happens through the intervention of a financial intermediary


  Indirect Financing
• What are the five essential elements of Financial System?


  Demanders and Suppliers of Fund

  Financial Intermediaries

  Financial Instruments

  Financial Markets

  Regulatory Environment
• Individuals or corporation that who will be needing financial support for them to start their business, fund for their working capital, or planned expansion.


  Demanders
• Known to be the borrower because they will be asking for funds with a promise to return them in the future

  Demanders
• Individuals or corporation who are willing to provide and/or has excess wealth and are looking for opportunity to keep it growing.

  Suppliers
• Also considered as lenders, these are people or investors that are willing to extend financial support with interest.

  Suppleirs
• Parties that have excess funds that they can lend out to other entities for a required return.

  Lenders
• Parties who are willing to pay the required return to obtain additional funds to finance their investments initiatives.

  Borrowers
• Special types of entities that act as a third party to facilitate the borrowing activity between lenders and borrowers

  Financial Intermediaries
• They gather funds from lenders and redistribute it to borrowers through an investment vehicles like loans.

  Financial Intermediaries
• Medium of exchange of contractual obligation of a party, where such contract can be traded. It can be tangible or intangible.

  Financial Instruments
• A contract where a party recognizes as an asset while the party treats it as a liability

  Financial Instruments
• Two types of financial instruments

  Cash or Derivative financial instruments
• The venue where suppliers and buyers of financial instruments meet

  Financial Markets
• Two types of financial markets


  Cash financial Instruments - Money Market

  Derivative financial Instruments - Capital Markets
• Inherent in every business operation. Clue: High ___, High reward

  Risk
• The governance body to ensure that the transactions that occur within the financial systems comply with the laws and regulations imposed.

  Regulatory Environment
• Refers to channels or places where funds and financial instruments such as stocks, bonds, and other securities are exchanged between willing individuals and/or entities.

  Financial Market
• Intends to establish a consistent, efficient, and cost-effective bridge between fund providers and fund demanders.

  Financial Markets
• The mechanism that bridge surplus and deficit economic units through providing ways to fund deficit units directly and indirectly via financial intermediarties.

  Financial Market
• Provide additional options to lenders and borrowers on which form they want their transaction to be in.

  Financial Markets
• What are the three (3) major economic functions of the financial market?


  Price Discovery, Liquidity, Reduced Transaction Costs
• Refers to the interaction between buyers and sellers in the financial market in order to come up with the price of traded financial instrument

  Price Discovery