PALAWAN STATE UNIVERSITY

College of Business and Accountancy

Department of Financial Management, Human Resource Management and Bus. Eco.
Puerto Princesa City

P2307 - CAPITAL MARKET

Long Examination (Midterm)
Name: Year Level / Section
Date: Seat No.:
TEST I – “Pick and GO!” Multiple Choice. (Direction: Choose the BEST answer and write in CAPITAL the letter that corresponds to it on
your answer sheet. Any form of erasures/corrections will be considered wrong. One (1) point each.)

1. What do you call a scheme that allows the flow or exchange of funds between people who spend less than their income and people
who need additional funds that operates at national and global levels?
A. Monetary Syste B. Economic System C. Financial Institutions D. Financial System E.Financial market
2. What do you call the sector that serves as channel of funds from people who spend less than their income to people who need
additional funds because they have spent beyond their earnings?
A. Monetary System B. Economic System C. Financial Institutions D. Financial System E.Financial market
3. The primary function of the financial system is to channel surplus funds to sectors with shortage. Which of the following statements
does not describe how financial system works?
A. Mobilize and allocate savings
B. Provide payment and settlement system
C. Regulates the behavior of the economy
D. Monitor corporate performance
E. Optimum allocation of risk-bearing and reduction
4. Preferred stock represents a claim that entitles the investor to receive a fixed dollar amount at a given period of time. In what
financial market do preferred stocks are being traded?
A. Debt Market. B. Equity Market. C. Capital Market D. Forex Market E. Money Market
5. Which type of financial market is involved in trading financial instruments such as mutual funds bought by individual investors, short-
term certificates of deposit (CDs), municipal notes, and Treasury bills?
A. Debt Market. B. Equity Market. C. Capital Market D. Forex Market E. Money Market
6. What do you call a decentralized system that is consists of a global network of computers and brokers, and is made up of banks,
commercial companies, central banks, investment management firms, hedge funds, and investors from around the world?
A. Cryptocurrency Market C.Forex Market E. Over-the-Counter Market
B. Money Market D. Money Market
7. What do you call the cash that is expected to be received each period from investing in a particular financial asset?
A. Maturity B. Return C. Cash Flow D. Interest E. Profit
8. What do you call the length of the interval until the date when the instrument is scheduled to make its final payment, or the owner is
entitled to demand liquidation?
A. Complexity B. Maturity C. Reversibility D. Liquidity E. Convertibility
9. What do you call the characteristic of a financial asset at which it can be used as a medium of exchange or in settlement of
transactions?
A. Moneyness B. Divisibility C. Reversibility D. Liquidity E. Currency
10. Banks accept deposits from their customers in different forms. What do you call the deposits that the account holder can get the
amount deposited without any restriction?
A. Fixed Deposits B. Time Deposits C. Saving Deposits D. Demand Deposits E. Current Deposits
11. When was the earliest development of banking system and early banking practices started?
A. 200 BC B. 2000 AD C. 20th Century D. 2000 BC E. 200 AD
12. What do you call the financial institution that existed in the Philippines during the Japanese Era and acted as the fiscal agent of the
Japanese Government in the country?
A. Japan Central Bank C. Southern Development Bank E. Japan Southern Bank
B. Bank of Japan D. South Fiscal Bank
13. What do you call a bank that primarily receives deposits for safekeeping funds from people who have no immediate need for cash
and invests these funds in long term investments.?
A. Investment Bank B. Savings Bank C. Primary Bank D. Commercial Banks E. Development Bank
14. In 1916, Philippine National Bank was granted its charter. How much was its initial capitalization?
A. 1,000,000.00 B. 2,000,000.00 C. 10,000,000.00 D. 20,000,000.00 E. 200,000,000/00
15. What is considered as the lifeblood of all banking institutions?
A. Money B. Deposit C. Investment D.Credit E. Capital
16. What do you call a banking system where majority portion of the stocks of two or more banks are held by a holding company?
A. Chain Banking B. Branch Banking C. Unit Banking D. Group Banking E. Network Banking
17. What special law was created during the Spanish era that is intended to supervise and regulate the banking business in the
Philippines?
A. Spanish Bank Code D. Spanish Civil Code and the Code of Commerce E. Code of Commerce
B. Spanish Civil Code E. Spanish Bank Code and the Code of Commerce

18. In 1929, the Bureau of Banking was created with the power to supervise banks in the Philippines. What do you call the highest
official serving the bureau?
 PALAWAN STATE UNIVERSITY
College of Business and Accountancy
Department of Financial Management, Human Resource Management and Bus. Eco.
Puerto Princesa City

P2307 - CAPITAL MARKET

Long Examination (Midterm)
A. Bank Commissioner B. Bank Chairman C. Bank Supervisor D. Bank Inspector E. Bank Governor
19. What executive order was passed to invalidate all Japanese occupation deposits including war notes, while considered Scrip
money valid?
A. EO 48 B. EO 46 C. E0 98 D. E0 96 E. EO 86
20. Depositors can access their funds through ATM. What does the acronym ATM stands for?
A. Automatic Teller Machine C. Automated Teller Machine E. Automatng Teller Machine
B. Automated Tellering Machine D. Automatic Tellering Machine

TEST II – “Correct me if I’m wrong!” Modified True or False. (Direction: Write “T” if the statement is correct. If not, write “F” and the
word/s that will make the statement correct. Write the answer on the space provide in each number. Two (2) points each. STRICTLY
NO ERASURES!).

1. _____-________________________: Financial return is comprised of the money and rights to receive money, evidenced by
financial instruments for claims.
2. _____-________________________: Development Banks assist government bodies and newly organized corporations to raise
funds for capital through the sale of stocks and bonds.
3. _____-________________________: Equity instruments are being traded in an equity market that is alternatively referred to as the
stock market.
4. _____-________________________: Surplus Saving units (SSUs) have income for the period that exceeds deficit spending units
(DSUs) resulting in saving.
5. _____-________________________: In discounting bills of exchange, bank pays the amount to the holder after adding some
amount as commission.

TEST III. – Identification. (Direction: Identify what is being described in each of the sentences. Write your answer on the space provided
in each number. One (1) point each).
1. Credit transactions were engaged in during the early ages as evidenced by __________________________.
2. ___________________________ are considered as the direct ancestors of banking business.
3. ___________________________ is given to respectable and reliable customers for a short period that allows them to overdraw
from the amount of their current account up to an agreed limit.
4. ___________________________ was organized to furnish the credit needs of duly registered and operating cooperative
associations.
5. ___________________________ was the first financial institution organized in the Philippines to take care of the flourishing
galleon trade in the country.
6. ___________________________ was created with the objective: rehabilitation of the war ravaged country as well as to step up
economic development.
7. ___________________________ was the first commercial bank in the Philippines that performed general banking functions and
partly financed foreign trade.
8. ___________________________ is the provision of banking services over the internet or other electronic networks brought by
development in technology.
9. ___________________________ is the union of two or more corporations into a single new corporation.
10. ___________________________ is an institution which deals with fiduciary activities such as administrator of estates, guardian
of minor’s interest, executor of last will and testaments and similar activities.

TEST IV– “Just Give Me a REASON!” Essay. (Direction: Briefly answer the question below. Cite example/s to support your stand. Five
(5) points each).
1. How do deposits and loans are related to each other? In what way you are affected or get involved with these two equally
important financial instruments?

2. In the banking history of the Philippines, what period do you consider our country had financially flourished the most? Why do
you say so?