Financial Markets 4
Financial Markets 4
Financial Markets 4
PM 4
institutions that deal in
all types of financial
transactions, right
from accepting
deposits and granting
a loan to the allocation
of credit into various
investment portfolios
Disadvantages
Restriction on the Borrower – loan
of Financial covenants
Institutions
System of Collateral Securities - grant
loans only against some security
provide liquidity, capital, and participation
price discovery - agree on the current value of
a financial asset or commodity (demand and
supply; risk aversion; transaction costs
Bottomline efficient allocation of capital and assets in a
financial economy
helps stimulate economic activity and fosters
economic growth
Commercial Banks Finance Company
Security Firms
Thrifts originally, thrifts only offered savings accounts and time deposits,
but over the past 20 years, the banks' scope of services has
expanded
they now offer the same products as credit unions and commercial
banks
Thrift
Commercial
specialize in mortgages and
real estate lending; promote for the profit/ grow earnings
a culture of savings and and have no specific mandate
Thrift vs homeownership in terms of asset class
Insurance
auto, health, homeowners, and life insurance
businesses obtain insurance policies for field-specific risks, For
example, a fast-food restaurant's policy may cover an employee's
injuries from cooking with a deep fryer.
medical malpractice insurance covers injury- or death-related
Insurance liability claims resulting from the health care provider's negligence
or malpractice.
There are also insurance policies available for very specific needs
such as business closures due to civil authority, kidnap, ransom,
and extortion (K&R) insurance, identity theft insurance, and
wedding liability and cancellation insurance
Policy Policy/
Contract
components of any insurance type are the premium, policy limit, and deductible
Premium Policy Limit
A policy’s premium is its price, typically a monthly
cost. Often, an insurer takes multiple factors into The policy limit is the maximum amount an insurer will pay
for a covered loss under a policy.
account to set a premium. Here are a few
examples: Maximums may be set per period (e.g., annual or policy
term), per loss or injury, or over the life of the policy, also
Auto insurance premiums: Your history of property known as the lifetime maximum.
and auto claims, age and location,
creditworthiness, and many other factors that may Typically, higher limits carry higher premiums.
vary by state.
Deductible
Home insurance premiums: The value of your The deductible is a specific amount you pay out of
home, personal belongings, location, claims pocket before the insurer pays a claim. Deductibles
history, and coverage amounts. serve as deterrents to large volumes of small and
insignificant claims.
Health insurance premiums: Age, sex, location,
health status, and coverage levels. For example, a $1,000 deductible means you pay the
first $1,000 toward any claims. Suppose your car's
Life insurance premiums: Age, sex, tobacco use, damage totals $2,000. You pay the first $1,000, and
health, and amount of coverage. your insurer pays the remaining $1,000.
a business entity which provides armed or unarmed
security services and expertise to clients in the private or
public sectors
The following year GMAC expanded to Great Britain, and by 1928 they had issued
more than four million loans. In 1985 the company earned $1 billion in revenues.
That same year GMAC began offering home loans and soon after branched out further
by lending to large and small businesses and by selling insurance.
After recording earnings of $1.8 billion in 2001, GMAC had financed more than $1
trillion in loans on more than 150 million vehicles since its inception.
Mutual
Funds
UITF vs Mutual
Fund?
Mutual fund shares are redeemable. This
means that when mutual fund investors want
Mutual funds generally sell and purchase their to sell their fund shares, they sell them back to
shares on a continuous basis, although some funds the fund or to a broker acting for the fund.
will stop selling when, for example, they reach a
certain level of assets under management.
Restrictions
to MF
Relatively safe
fund
Relying less on children during the later years
Pension
Fund
Private pension fund and public pension fund
Exchange
Traded Fund
https://www.pse.com.ph/exchange-traded-fund/
The acronym for Intraday Net Asset Value. NAV informs investors about the worth of an asset at the end of each trading
day. INAV informs investors about the worth of an asset after every 15 seconds. It is the end-of-day value of a fund.