Actividad 5: Business Communication
Business Communication
Actividad 5
Financial System
What is Finance? As I read somewhere else, finance could be described as the management of money and it includes activities like investing, borrowing, saving, and forecasting.
What is the Financial System? I can describe a financial system as a network of financial institutions, an instrument like insurance companies, stock exchanges, and investment banks that work together to exchange and transfer capital from one place to another.
What are the functions of a financial system? Deals with the financial transactions and the exchange of money between savers, investors, lenders, and borrowers. Those are made of different intricate and complex models that link financial institutions and markets to provide financial services.
Provides a payment system for the exchange of goods and services.
Provides the mechanism to pull the funds in terms of household savings to corporate investments.
Provides the financial capital for long-term capital formation.
Facilitates the investors and other market participants to liquidate their investment alternatives like stocks and bonds.
Takes care of short-term and long-term needs of the market participants.
How are the main types of financial institutions categorized? Describe each one.
Banking: Banks provide transaction services, Create deposits or credit, Subject to legal reserve requirements, Can advance credit by creating claims against themselves. Banks are creators of credit.
Non-banking: Life Insurance corporations, Mutual and other non-banking Financial Companies. Non-banking are purveyors of credit.
Intermediaries: Intermediate between savers and investors, they lend money as mobilising savings, their liabilities are towards the ultimate savers, all banking institutions are intermediaries.
Non-intermediaries: They do the loan business but their resources are not directly obtained from the savers.
Which are the main classes of financial instruments issued in a financial system? Describe them in detail.
Cash Instruments: The values of cash instruments are directly influenced and determined by the markets. These can be securities that are easily transferable. Cash instruments may also be deposits and loans agreed upon by borrowers and lenders.
Derivative Instruments: The value and characteristics of derivative instruments are based on the vehicle’s underlying components, such as assets, interest rates, or indices.
What are the distinctions between various types of financial markets according to their function? Explain them.
Money and Capital Markets: This conventional distinction is based on the two differences in the period of maturity of financial assets issued in these markets. While the money markets deal in the short-term claims, the capital markets do so in the long-term claims.
Primary and Secondary Markets: Primary markets deal in the new financial claims or new securities, Secondary markets deal in securities already issued or existing or outstanding.
What does the “flow of funds” refer to? Explain in detail.
Our financial accounts are used to track the net inflows and outflows of money to and from various sectors of a national economy.
Great job, Majo! I agree with you totally in the part of finance as a correct management of the money. These topics are very important for our career. :)
ResponderBorrarI'm totally agree with you, your last answers is so concret.
ResponderBorrarThey are very good answers. I have some different ones, but it was because I understood them differently.
ResponderBorrarThe answers you have are like mines! Our ideas are very similar Majito. Good job!
ResponderBorrarHi!! I loved your description of finances haha it's simple but it works!!! ahahahahah that's why I loved it! I wrote something more complicated but your explanation works for everyone, even for ppeople who has no idea anbout this subject, and also I agree with most f your answers!
ResponderBorraryour answers are really clear to read , and to understand.
ResponderBorrar