NUA: 415306

Answer the questions.

1.      What is Finance?

Finances are monetary resources comprising debt and ownership funds of the state, company or person.

2.      What is Financial System?

The financial system deals with financial transactions and the exchange of money between servers, lenders, investors and borrowers.

3.      What are the functions of a financial system?

a.      It provides a payment system for the exchange of goods and services in the economy.

b.      It facilitates the investors and other market participants to liquidate their investment alternatives like stocks and bonds.

c.      It takes care of both short-term and long-term needs of the market participants.

d.      It provides the financial capital for long-term capital formation for the government and business organizations.

4.      How are the main types of financial institutions categorized? Describe each one.

a.      Banking:  Banks provide transaction services, create the deposit or credit.

b.      Non-banking: Non-banks basically take money from us, but they are not able to create money in the system.

5.      Which are the main classes of financial instruments issued in a financial system? Describe them in detail.

a.      CETES: They are the oldest debt instrument issued by the federal government.

b.      A bill of exchange: It is a collection document where the payment of a certain sum of money is ordered on the due date.

c.      BPAS: This is an instrument that is auctioned in the debt market, and can be acquired by Stockbrokers and Banks.

d.      Bond: A bond is a debt instrument issued by a company or public administration to finance itself.

e.      Share: It is a title issued by a Company that represents the value of one of the equal fractions into which its capital stock is divided.

6.      What are the distinctions between various types of financial markets according to their function? Explain them.

There are 3 types of markets according to their function, and these differ according to the intermediaries that there are.

7.      What does the “flow of funds” refer to? Explain in detail. 

Is the amount of money, cash and credit, flowing into and out of a business