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What are financial markets?
A marketplace where buyers and sellers trade financial products like bonds, stocks, currencies, and derivatives.
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What are the key roles of financial markets?
Accommodate finance needs and investors needs.
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What is interest?
The price paid for the use of money for a period of time.
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What are the two types of interest rates?
Lending Rate and Borrowing Rate.
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Who monitors interest rates in the Philippines?
Bangko Sentral ng Pilipinas (BSP).
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What is the prime lending rate?
The lowest rate of interest charged by financial institutions for lending money.
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What is the Bank Average Lending Rate?
The weighted average interest rate charged by commercial banks on loans during a period.
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What is the savings deposit rate?
Interest rate that a bank pays depositors for the use of their money.
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What is the time deposit rate?
Interest rate paid for interest-bearing deposits with fixed maturity.
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What is the difference between simple and compound interest?
Simple interest is on the principal only; compound interest is on interest as well.
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What are financial institutions?
Intermediaries that invest excess funds in financial markets.
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Who are surplus units?
Individuals or entities with savings greater than money received.
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Who are deficit units?
Individuals or entities with savings less than money received.
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What is the role of financial markets in the economy?
Promote greater economic efficiency by creating jobs, services, and goods.
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What is indirect financing?
Funds flow from surplus units through financial intermediaries to deficit units.
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What is direct financing?
Funds are directly transferred from surplus to deficit units without intermediaries.
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What is an example of direct financing?
Nobe buying a commercial building and constructing a mall with Harold Sy's investment.
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What are equity securities?
Stocks that represent ownership.
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What are debt securities?
Bonds and other instruments used to finance real estate purchases.
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How are interest rates determined?
By the supply and demand for funds in the money market.
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What is the BSP's role in interest rates?
Sets the overnight rate which influences other interest rates.
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Can the BSP regulate interest rates?
Yes, during extraordinary economic or social conditions.
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Does BSP allow the market to determine rates?
Imposing rate ceilings could distort the credit market.
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What is the inflation rate?
Annual percentage increase in average price of goods and services consumed by a typical Filipino family.
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What are the effects of high interest rates?
Reduce consumer spending and productivity, increase savings, can slow down the economy.
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What are the effects of low interest rates?
Stimulate spending, sales, and productivity; encourage economic activity but may lead to inflation.
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What are inflation concerns with low interest rates?
Prolonged low rates increase risk of inflation as demand exceeds supply, leading to price increases.
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What is BSP's main role in interest rate management?
Manage monetary policy to ensure price stability and financial stability; influences market by adjusting key policy rate.
Browse your cards here, or sign up to study with spaced repetition.
How does inflation affect BSP's interest rate decisions?
If inflation rises, BSP increases key policy rate; if inflation decreases, BSP lowers key policy rate.
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What is present value (PV)?
Value of a future amount of money today, considering the time value of money.
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What is used to calculate present value?
Interest rate (discount rate) is used to calculate the present value of future cash flows.
Browse your cards here, or sign up to study with spaced repetition.
What are financial markets?
A marketplace where buyers and sellers trade financial products like bonds, stocks, currencies, and derivatives.
What are the key roles of financial markets?
Accommodate finance needs and investors needs.
What is interest?
The price paid for the use of money for a period of time.
What are the two types of interest rates?
Lending Rate and Borrowing Rate.
Who monitors interest rates in the Philippines?
Bangko Sentral ng Pilipinas (BSP).
What is the prime lending rate?
The lowest rate of interest charged by financial institutions for lending money.
What is the Bank Average Lending Rate?
The weighted average interest rate charged by commercial banks on loans during a period.
What is the savings deposit rate?
Interest rate that a bank pays depositors for the use of their money.
What is the time deposit rate?
Interest rate paid for interest-bearing deposits with fixed maturity.
What is the difference between simple and compound interest?
Simple interest is on the principal only; compound interest is on interest as well.
What are financial institutions?
Intermediaries that invest excess funds in financial markets.
Who are surplus units?
Individuals or entities with savings greater than money received.
Who are deficit units?
Individuals or entities with savings less than money received.
What is the role of financial markets in the economy?
Promote greater economic efficiency by creating jobs, services, and goods.
What is indirect financing?
Funds flow from surplus units through financial intermediaries to deficit units.
What is direct financing?
Funds are directly transferred from surplus to deficit units without intermediaries.
What is an example of direct financing?
Nobe buying a commercial building and constructing a mall with Harold Sy's investment.
What are equity securities?
Stocks that represent ownership.
What are debt securities?
Bonds and other instruments used to finance real estate purchases.
How are interest rates determined?
By the supply and demand for funds in the money market.
What is the BSP's role in interest rates?
Sets the overnight rate which influences other interest rates.
Can the BSP regulate interest rates?
Yes, during extraordinary economic or social conditions.
Does BSP allow the market to determine rates?
Imposing rate ceilings could distort the credit market.
What is the inflation rate?
Annual percentage increase in average price of goods and services consumed by a typical Filipino family.
What are the effects of high interest rates?
Reduce consumer spending and productivity, increase savings, can slow down the economy.
What are the effects of low interest rates?
Stimulate spending, sales, and productivity; encourage economic activity but may lead to inflation.
What are inflation concerns with low interest rates?
Prolonged low rates increase risk of inflation as demand exceeds supply, leading to price increases.
What is BSP's main role in interest rate management?
Manage monetary policy to ensure price stability and financial stability; influences market by adjusting key policy rate.
How does inflation affect BSP's interest rate decisions?
If inflation rises, BSP increases key policy rate; if inflation decreases, BSP lowers key policy rate.
What is present value (PV)?
Value of a future amount of money today, considering the time value of money.
What is used to calculate present value?
Interest rate (discount rate) is used to calculate the present value of future cash flows.
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