a liquid asset used to facilitate transactions of
value. It is used as a medium of exchange between
individuals and entities.
ease of converting an asset into cash without
loss; the depth of a financial market.
BANGKO SENTRAL NG PILIPINAS (BSP)
the only authorized
government entity to print money and is responsible for the
proper administration of the monetary banking credit
system of the republic to achieve monetary stability and
create conditions conducive to economic developments.
total amount of
money—cash, coins, and balances
in bank accounts—in circulation.
cost of credit; it is the price paid for the use of someone
RATE OF INTEREST
the amount a lender charges a
borrower and is a percentage of the principal—the amount loaned).
term used in finance to refer to changes in
values or interest rates.
illustrates the structure, which relates the yield
on debt instruments with different terms of maturity.
Refer broadly to any marketplace where the trading of securities occurs,
including the stock market, bond market, forex market, and derivatives market,
An entity that acts as the middleman between two parties in a financial
transactions, such as commercial bank, investment banks, mutual funds and
The most important depository institution in terms of size. Also a prime source of funds to consumers.
CERTIFICATE OF DEPOSIT
time deposit issued by a bank with a
specified interest rate and maturity.
LONG-TERM NEGOTIABLE CERTIFICATE OF DEPOSIT
product offered to investors looking for a relatively safe investment,
but with higher interest rates than a regular savings account or
short-term time deposit.
A place for savers, especially individuals with modest sums,
to deposit funds.
MUTUAL SAVINGS BANKS
owned by its depositors, but the bank itself is managed by a board of
SAVINGS AND LOAN ASSOCIATIONS
Primarily as a source of mortgage loans and has evolved into a thrift
institutions that accepts deposits from anyone and makes a variety of loan.
funds that banks must hold against deposit liabilities. The minimum amount that all banks must maintain as a
reserve is determined by the Monetary Board
refer to the percentage of bank deposits and deposit
substitute liabilities that banks must set aside in deposits
with the BSP which they cannot lend out, or where available
through reserve-eligible government securities.
defined as an alternative
form of obtaining funds from the public, other than deposits,
through the issuance, endorsement, or acceptance of debt
instruments for the borrower's own account, for the purpose
of relending or purchasing of receivables and other
reserves held by a bank in excess of those
it must hold to meet its reserve requirements.
a bank that provides services on
behalf of another, equal or unequal, financial institution. It
can facilitate wire transfers, conduct business transactions,
accept deposits, and gather documents on behalf of another
Short-term securities especially
Treasury bills, held by banks to increase their liquidity
essentially the assured amount a bank depositor
gets in the case that the bank cannot fulfill its obligations. It is
mandatory by law and is designed to maintain financial stability.
PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC)
insurance on all valid deposits up to Maximum Deposit Insurance
Coverage (MIDC) of P500,000 per depositor of a closed bank.
set of actions to control a
nation's overall money supply and achieve economic growth.
LIFE INSURANCE COMPANIES
also performs the role of a financial
intermediary because they receive the funds of savers, create a claim
on themselves, and lend the funds to borrowers.
a retirement plan that requires an employer to make
contributions to a pool of funds set aside for a worker's future
PERSONAL EQUITY RETIREMENT ACCOUNT (PERA)
is a voluntary retirement contribution plan that gives you the
freedom to save and invest up to PhP100,000 annually. Also, the
returns are completely tax-free.
MONEY MARKET MUTUAL FUND
type of mutual fund that invests in
high-quality, short-term debt instruments, cash, and cash
purchase of an issue of new
securities for subsequent sale by
investment bankers; the guaranteeing of
the sale of a new issue of securities
MERGER AND ACQUISITION
consolidation of companies or their
major business assets through financial
transactions between companies.
offer valuable advice to their clients
the practice of increasing total wealth
over time by acquiring, maintaining,
and trading investments that have the
potential to grow in value.
FULL UNDERWRITING BASIS
commits to purchase full
amount of securities issuance
BEST EFFORTS BASIS
Underwriter or Syndicate will
" to sell or
distribute securities only with
no commitment for full
amount to be issued.
investment banker who makes
an agreement to sell a new
issue and forms a syndicate to
sell the securities.
a group of
brokerage houses that joins
together to underwrite and
market a specific sale of
that manage the sale of
EFFICIENT CAPITAL MARKET
security prices adjust
rapidly to the arrival of new information, therefore
current prices if securities reflect all information
RANDOM WALK HYPOTHESIS
Changes in security prices
FAIR GAME MODEL
current market price reflect all available
information about a security and the expected return
based upon this price is consistent with its risk.
EFFICIENT MARKET HYPOTHESIS (EMH)
divided into three
subhypothesis depending on the information set involved.
Prices reflect all security-market information
Prices reflect all public information
Prices reflect all public and private information
STOCK EXCHANGE SPECIALIST
Specialists were responsible
for facilitating the trade of a given stock by selling their
own stock inventory when there was a large shift in
demand, thus ensuring market liquidity.
a financial professional who studies
various industries and companies, provides research and
valuation reports, and makes buy, sell, and/or hold
PROFESSIONAL MONEY MANAGERS
is a person or financial firm
that manages the securities portfolio of individual or
refers to the propensity for
people to allocate money for specific purposes.
states that people tend to mimic the
financial behaviors of the majority of the herd.
refers to decision-making based
on extreme emotions or emotional strains such as anxiety, anger,
fear, or excitement.
refers to attaching a spending level to a
refers to a tendency to make
choices based on overconfidence in one's own knowledge or skill.
when investors have a bias toward accepting
information that confirms their already-held belief in an
investment. If information surfaces, investors accept it readily to
confirm that they're correct about their investment decision—
even if the information is flawed.
when investors' memory of recent events
makes them biased or leads them to believe that the event is far
more likely to occur again.
when investors place a greater weighting on
the concern for losses than the pleasure from market gains.
when investors tend to invest in what they
know, such as domestic companies or locally owned investments.
Use (something) to maximum advantage. also use of another person's or firm's funds in
return for agreeing to pay a fixed return for
Use of fixed factors of production (fixed
costs) instead of variable factors of
production (variable costs) to produce a
level of output.
remain the same
irrespective of the sale numbers of the
company. For example rent, fixed salaries
of the employees, taxes.
are directly proportional
to sales and it increases when sales rise
and vice versa.
FIXED ASSETS TURNOVER RATIO
One means to measure operating leverage is the ratio
of sales to fixed assets, also referred to as fixed asset
A technique for studying the relationship among fixed
costs, variable costs, sales volume, and profits.
DEGREE OF OPERATING LEVERAGE
is a multiple
that measures how much the operating income of a
company will change in response to a change in sales.
The inherent uncertainty in
the physical operations of the firm. Its
impact is shown in the variability of the
firm's operating income (EBIT).
DEGREE OF FINANCIAL LEVERAGE
is a leverage ratio that
measures the sensitivity of a company's earnings per share
(EPS) to fluctuations in its operating income, as a result of
changes in its capital structure.