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STUDY GUIDE FOR MODULE NO. _3_

Part III. Capital Markets and Capital Market Theory

Module 3: The Financial System
MODULE OVERVIEW

It is through a country’s financial system that entities with funds allocate those funds
to those who have potentially more productive ways to deploy those funds, potentially
leading to faster growth for a country’s economy. A financial system makes possible a more
efficient transfer of funds is by overcoming the information asymmetry problem between
those with funds to invest and those needing funds. In general, information asymmetry
means that one party to a transaction has more or superior information than the other party,
resulting in an imbalance of power in a transaction. In terms of a financial system,
information asymmetry can lead to an inefficient allocation of financial resources.

MODULE LEARNING OBJECTIVES

At the end of this module, you should be able to:

 Define what a financial system is and illustrate its role in the economy;
 Identify the different participants in the financial systems and their roles;
 Discuss the differences between the market participants.

LEARNING CONTENTS

FINANCIAL SYSTEM: DEFINITION

Financial system describes collectively the financial markets, the financial system
participants and the financial instruments and securities that are trades in the financial
markets.

The functions of the financial system are:

 To channel the funds from the savings units (lenders) to the deficit units (borrowers);
 To provide medium of exchange;
 To provide a mechanism for risk sharing; and
 To provide a channel through which the central bank can influence the economy, in
general and the financial system, in particular.

Multi-national financial system refers to the collective financial transfer mechanisms that
facilitate the movement of money and profits between and among financial system
participants throughout the world.

Four Basic Functions of a Financial System:

 Fund acquisition – a way of getting deposits and necessary funds to finance project
and investments
 Fund allocation – determining to which uses, projects, or investments that acquired
funds will be used

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 Fund distribution – the process by which necessary funds are given to the uses,
projects, or investments that needs funds.
 Fund utilization – using the funds for its intended purpose.

FINANCIAL SYSTEM (MARKET) PARTICIPANTS

 Household or consumers – the group that receives income, majority of which

typically comes from wages and salaries. Such income is spent on goods and
services, and a part is saved.
o Gross savings – is equal to current income less current expenditures.
o Consumption – it is what is spent.
o Non-durable goods or non-durables – goods that are consumed within
a current period.
o Durable consumer goods or durables – goods that will last for more
than a year.
 Financial institutions/intermediaries -are the firms that bridge the gap between
surplus units or investors/lenders and deficit units or borrowers. They channel funds
from lender to borrowers. They include depository (commercial and thrift banks) or
non-depository institutions.
 Non-financial institutions – are businesses other than financial institutions or
intermediaries. They include trading, manufacturing, extractive industries,
construction, genetic industries, and all firms other than the financial ones. When
they buy securities, they lenders, investors, or savers; when they issue the
securities, they are the borrowers.
 Government – means the national, provincial, municipality or city governments, and
barangays or towns comprising the Philippines as a whole. The Bureau of the
Treasury (BTR) is part of the government that is a participant in the financial system.
When the BTR issue their own security, they act as borrowers/deficit units, and when
the BTR buy securities, they act as investors or savers/surplus units.
 Central Bank – The Bangko Sentral ng Pilipinas and all other central banks of the
different countries are mandated to ensure that their respective countries are stable
and healthy financial system. They oversee the operations of their entire financial
system and mandate the rules, regulations, and monetary policies that will help
maintain healthy and stable economy. Central bank is the “banker” to banks.
 Foreign participants/investors – This refer to the participants from the rest of the
world – household, governments, financial and non-financial firms and central banks.
Goods and services and financial instruments/securities are exchanged across
national boundaries.

FINANCIAL MARKET

Financial Markets are structures through which funds flow. They are the institutions and
systems that facilitate transactions in all types of financial claim. It is a meeting place for
those with excess funds (lender) and those who need funds (borrower).

A financial claim entitles:

 The creditors to receive payment from a debtor in circumstances specified in the
contract, both oral or written
 The depositors have financial claims on banks where they hold their depositss

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Classifications of Financial Markets:

1. Primary Market – are markets in which user of funds (corporation) raise funds,
through new issues of financial instruments such as stocks and bonds. They issue
primary securities (original or new shares).
 Equity security (stock)
 Debt security (bond)

Investment banks/merchant banks – it is where primary market transactions are done which
help the corporations issuing the stocks or bonds sell these securities to interested
investors.

Underwriter – agrees the sale of the issues but does not intend to hold the shares or bonds
on his own account.

Initial Public Offerings (IPOs) – first-time issues for the public.

2. Secondary Market – are markets for currently outstanding securities. These

securities were previously bought and owned and now being resold either by the
initial investors or those who have purchased securities in this market.

Outstanding shares or securities – are shares held by the public.

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Purposes of Secondary Markets:

 Marketability – easy selling and transfer of ownership
 Liquidity – easy convertibility to cash of securities

Securities dealer – is a financial institution organized usually as a corporation or a

partnership which principal business is to buy and sell securities. They need to obtain
license from the SEC pursuant to the Revised Securities Act. They buy securities as their
asset and resell them.

MONEY MARKET

Money market – cover market for short-term debt instruments usually issued by companies
with high credit standing. They consist of a network of institutions and facilities for trading
debt securities with a maturity of one year or less.

Characteristics of money market instruments:

 highly liquid
 low default risk
 highly marketable
 gives higher yields
 wholesale markets (large transactions involved and in massive quantities)
 open market transactions (impersonal and competitive nature)

Open market transaction – is an order placed by insider after all the appropriate
documentation has filed to buy and sell restricted securities openly in an exchange.

Examples of debt securities:

 ST T-bills issued by the government
 banker’s acceptances
 negotiable certificates of deposit
 money market deposit accounts (MMDAs)
 money market mutual funds (MMMFs)
 commercial papers (CPs).

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CAPITAL MARKET

Capital markets – are markets for long-term securities. It has a maturity of more than a
year.

Examples:
 debt securities: notes, bonds, mortgages, leases
 equity securities: stocks

Characteristics of capital market instruments:

 greater default and market risks
 higher return yield
 wider price fluctuations

Capital goods – are used to produce goods and services to generate revenues.

The capital market consists of:

1. Securities market
2. Negotiated (or non-securities) market

1. Securities Market

In securities market, companies issue common stocks or bonds, which are marketable/
negotiable to obtain long-term funds.

Negotiability – allows security to be traded anonymously. It also improves liquidity because

anyone who holds the security can immediately sell the security when the holder needs
cash. The holder can even sell the security prior to maturity.

Securities market is composed of:

a. stock market for equity or stock securities
b. bond market for debt securities
c. derivative securities market for securities deriving their value from another security

A. STOCK MARKET

Stock market serves as the medium or agent of exchange transactions dealing with equity
securities. It involves institutions and analysts who review the performance of listed
companies. All markets follow the basic economic law of supply and demand. If there are a
lot of shares of any one company in the market, its prices go down. The scarcity of the
shares drives the share prices up. If many are buying the stocks, it creates demand and
raises prices up.

Classifying stocks into boards enabled the Philippine Stock Exchange (PSE) to calculate
stock indexes (indices) for each group.

Stock index
 It is a measure of the price level of the shares listed in the exchange by the indicated

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category.
 It is useful as a track record of changes in stock prices over time.
 It reports price movements of groups and the entire market.
 It reports the volume of shares traded, price range during the year, earnings per
share and dividends per share.

PSE tracks four indices:

1. Commercial and industrial
2. Property
3. Mining
4. Oil

Saldana (1997) listed the following prices in a trading day:

1. Open – the stock price for the first transaction at the start of the trading day
2. Low – the lowest stock price for transactions during the day
3. High – the highest stock price for transactions during the day
4. Close – the stock price for the last transaction of the day

Note:
Closing price > opening price = upward trend in the price of stock
Wide difference in the low and high price = volatility and therefore, risk in the stock.

B. BOND MARKET

Bond market is the market where bonds are issued and traded. It is generally classified
into:
1. Treasury notes and bonds market
 are issued by the government’s treasury
 they are backed by the full faith and credit of the government, hence,
free from risks and low rates of interests (yield to maturity) to investors
 longer maturity, hence, wider price fluctuations and subject to interest
rate risk
 they have a maturity of 1 to 10 years
2. Municipal bonds market
 LGU bonds have only been acknowledged as a potential tool for
development
 It reduces the dependence of LGUs on the national government in
implementing their development programs and encourages and
rewards transparent good governance among local government
executives
 It attracts private institutional capital and providing the investing public
with alternative long-term investment instruments
3. Corporate bonds market
 Are long-term bonds issued by private corporations
 Bond indenture is the legal contract that specifies the rights and
obligations of the bond issuer and bondholders (investors), term of
bond, interest rate and interest payment dates

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C. DERIVATIVES MARKET

Derivatives securities market – refers to the market where derivative securities are traded.

Derivative securities
- are financial instruments which payoffs are linked to another previously issued
securities.
- Represents agreements between two parties to exchange a standard quality of an
asset or cash flow at a predetermined price at a specified date in the future

* More of this will be discussed in Module 5.

2. Negotiated (or non-securities) market

 This does not involve securities and are negotiated because it results from negotiation
between a borrower and a lender.
 It is where the buyer and the seller deal with each other, either directly or indirectly
through a broker or a dealer, with regard to both price and volume.

Loan agreement – is an agreement between the borrower and the lender for a definite
period of time.

Term of loan – length of period from the date the loan is taken to its maturity date, the date
of loan is to be repaid.

Syndicate – it is a group of banks where the amount of financing or funds that is large may
be obtained.

The negotiated or non-securities market includes, but is not limited to, the following:
1. Loan market
 Is where a one-on-one transaction takes place between the borrower
and a lender.
2. Mortgage market
 Is where the real property like land (residential, agricultural or
industrial), building (residential, commercial, etc.) and big machineries
are used to guarantee or secure big loans.
 It is a type of loan but secured loan guaranteed by a collateral if the
company/person mortgages the property.
 Mortgage market also includes market for foreclosed properties
(properties that are taken by the lenders because the borrowers were
unable to pay their loan and since the property is used as the collateral,
the property is taken over by the lender).
 Examples: National Home Mortgage Finance Corporation, GSIS, SSS
and Pag-IBIG Fund.
3. Lease market
 It is where equipment, building, or other property is being leased/rented
out to another party. The lease could be operating lease or a capital

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lease.
 Lessor (who is renting the property)/lessee(who is to use the property)

OTHER MARKETS

1. Consumer Credit Market

- Involves parties and transactions related to loans granted to households who desired
to buy properties, travel, obtain education for themselves or loved ones or other
similar needs. The borrowers are consumers.
- Consumer credit usually takes form of:
 Character loan or longer-term like car loans (5 years)
 Appliance loan (3 years)
- These can include pawnshops, SSS pension lending companies and other small
consumer loan companies.
2. Organized Markets
- These are the exchanges that started as physical places where trading took place.
- Exchanges are situated in a certain location with definite rules of trading.
3. Over-the-Counter Market (OTC)
- Have never been a “place” but often a well-organized networks of trading
relationships centered on one or more dealers.
- Dealers act as market makers by quoting prices at which they will sell or buy to other
dealers and to their clients or customers.
4. Auction Market
- It is where trading is done by independent third-party matching prices on orders
received to buy and sell particularly security. Stocks are sold to the highest bidder,
the one who offered the highest price, on the trading floors.
5. Foreign Exchange Markets
- Provides the physical and institutional structure through which the money of one
country is exchanged for that of another country, the rate of exchange between
currencies is determined, and foreign exchange transaction are physically opted.
- A foreign exchange transaction is an agreement between a buyer and a seller that a
given amount of one currency is to be delivered at a specified rate for some
currency.
6. Spot Market
- Are called such because buying and selling is done “on the spot” that is, immediate
delivery and payment. The buyer pays immediately and the seller delivers
immediately.
7. Futures Market
- Is where contracts are originated and traded that give the holder right to buy
something in the future at a price specified in the contract.
8. Forward Market
- Are contractual agreements between a buyer and a seller at a time zero (0) to
exchange a pre-specified, non-standardized asset for cash at some later date.
9. Options Market
- Is where the stock options are traded.
- Options are traded in securities marketplaces among institutional investors,
individual investors and professional traders and trades can be one contract or
many.
10. Swap Market
- Are agreements between two parties (counterparties) in exchanging specified

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periodic cash flows in the future based on an underlying instrument or price.

11. Third and Fourth Markets

- When securities that are listed in organized exchanges as NYSE, AMEX, and
London Stock Exchange Group, among others are sold in over-the-counter market.
- Third market – refers to transactions between broker-dealers and large institutions.
- Fourth market – refers to transactions that take place between securities firms and
large institutional investors like pension funds and investment companies.

TYPES OF INVESTORS
1. Risk-averse investors (bull and chicken)
- They prefer risk-free assets than risky assets as long as the expected returns
on each asset are the same. In order for them to invest in a risky asset, they
will require a higher return.
2. Risk-taker investors (bears and pigs)
- They are the investors who are ready to pay a higher price for an investment
regardless of the risks involved.
3. Risk-neutral investors
 They are investors who do not take into account the risks involved in the
investment and who are focused only on the expected returns.

In stock market:
 Bull market– stock prices are going up and market indices go up. It is the rise in the
value of the market of at least 20%.
 Bear market – It is when the economy is bad, recession is looming and stock prices
are falling. It makes it tough for investors to pick profitable stocks.
 Chicken market – it means you are scared easily. Fear overrides their need to make
profits so they will turn only to money market securities or get out of the market
easily.
 Pig market – They are high-risk investors looking for the one big score in a short
period of time. They buy on hot tips and invest in companies without doing their due
diligence.

FINANCIAL INSTRUMENTS

Capital Market Institute of the Philippines (CMIP) is a bullish organization that stokes
and develops the investment character of Filipinos in the Philippine financial/capital market.
It is committed to promoting, developing and advancing awareness and knowledge of
capital market and its role int the development of the national economy through developing,
organizing and conducting programs, projects, researches and other activities to upgrade
competencies of members, practitioners, entrepreneurs, professionals, teachers and
students in dealing with the Philippine capital market.

A. Money market instruments

B. Capital market instruments

A. MONEY MARKET INSTRUMENTS

These are short-term securities. They are paper or electronic evidences of debt dealt

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in the money markets.

1. Cash Management Bills

- Are government-issued securities with maturities of less than 91 days,
specifically 35 days or 42 days. Government Securities (GS) are unconditional
obligations of the government issuing them, backed up by the full taxing
power of the issuing government.
2. Treasury Bills (T-Bills)
- Are issued by the Bureau of the Treasury with 91-day, 182-day and 364-day
maturities. They are sold only through government securities eligible dealers
(GSEDs) authorized by the government to sell T-bills. Transactions are done
through bidding online.
3. Banker’s Acceptances
- Is a time draft issued by a bank payable to a seller of goods. It is drawn on
and accepted by the bank.
a. Time draft – is an order for the bank to pay a specified amount of
money to the bearer of the time draft on a given date.
b. Sight draft – is an order to pay immediately.
4. Letters of Credit
- Banker’s acceptances are generally used with the purchase of goods or
services either domestically or internationally. In these cases, the buyer has
its bank issue letters of credit on its behalf in favor of the seller.
 International letter of credit – is opened for import
 Domestic letter of credit – is opened for local purchase
 Commercial letter of credit – it is a contractual agreement between the
bank (known as the issuing bank) on behalf of the buyer (known as the
drawer) authorizing another bank, the correspondent bank (known as
the advising or confirming bank) to make payment to the beneficiary (or
the seller).
- A letter of credit, or "credit letter," is a letter from a bank guaranteeing that a
buyer's payment to a seller will be received on time and for the correct
amount. In the event that the buyer is unable to make a payment on the
purchase, the bank will be required to cover the full or remaining amount of
the purchase.
5. Negotiable Certificates of Deposit
- It is a receipt issued by a commercial bank for the deposit of money. It is a
time deposit with a definite maturity date (of up to one year) and a definite
rate of interest.
- It stipulates that the bearer is entitled to receive annual interest payments at
the rate indicated in the certificate, together with the principal upon maturity of
the certificate.
6. Repurchase Agreements
- Are legal contacts that involve the actual sale of securities by a borrower to a
lender with a commitment on the part of the borrower to repurchase the
securities at a contract price plus a stated interest charge at a later date.
- A reverse repurchase agreement or reverse repo is an agreement involving
the purchase of securities by one party to another with the promise to sell
them back at a given date in the future.
7. Money Market Deposit Accounts (Money Market Accounts)

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-
Are PDIC-insured deposit accounts that are usually managed by banks or
brokerages and can be a convenient place to store money that is to be used
for upcoming investments or has been received from the sale of recent
investments.
- They are very safe and highly liquid investments with higher paying interest
rates rather than savings accounts but lower than money market mutual
funds.
8. Money Market Mutual Funds
- Are investment funds that pool funds from numerous investors and invest in
money market instruments offered by investment companies.
 Mutual fund – is an investment company that pools the funds of many
individuals and institutional investors to form a massive asset base.
 Stock funds/Equity funds – which invest primarily in shares of stock.
 Balanced funds – invest both in shares of stocks and debt instruments
combining the features of both the growth funds and the income funds.
 Bond funds – invest in long-term debt instruments of government and
corporations.
 Money market funds – invest purely in short-term debt instruments.

More comprehensively, mutual funds can be classified as:

a) Growth funds – invest in assets that are expected to reap large capital gain
(generally equity securities)
b) Income funds – invest in stocks that regularly pay dividends and in notes and
bonds that regularly pay interest
c) Balanced funds – combine the features of both growth funds and income
funds
d) Sector funds – invest in specific industries as health care, financial services,
utilities and extractive industries
e) Index funds – invest in a basket of securities that make up some market index
as the S&P index of stocks
f) Global funds – invest in securities issued in many countries providing
diversification
9. Certificate of Assignment
- is an agreement that transfers the right of the seller over a security in favor of
a buyer. The underlying security carries a promise to pay a certain amount of
money on a fixed date like a promissory note. The arrangement allows the
buyer to hold the security as a guaranteed source of repayment.
10. Certificate of Participation
- Is an instrument that entitles the holder to a proportionate equitable interest in
the securities held by the issuing firm or an entitlement to a pro rata share in a
pledged revenue stream, usually lease payments.
11. Eurodollar CD and Eurocommercial Papers (ECP)
- Eurodollar refers to U.S. dollar-denominated deposits at foreign banks or at
the overseas branches of American banks.
- Eurocommercial paper (ECP) is a form of unsecured, short-term loan that is
issued by a bank or corporation in the international money market. Notably,
ECPs are denominated in a currency that is different from the domestic
currency of the market where the paper—debt security, or bond—is issued.

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B. CAPITAL MARKET INSTRUMENTS

These are either equity securities or debt securities. These include corporate stocks,
mortgages, corporate bonds, treasury securities, state and local government bonds.

Classifications of capital market instruments:

1. Non-negotiable/non-marketable instruments
a. Loans – a direct borrowings of deficit units from surplus units.
b. Leases – are rent agreements.
c. Mortgages – are agreements where a property owner borrows money from a
financial institution using the property as a security or collateral for the loan.
d. Lines of Credit – is a bank’s commitment to make loans to regular depositors
up to a specified amount.

2. Negotiable/marketable instruments
a. Corporate stocks – are the largest capital market instruments. Stocks are
evidence if ownership in corporation. The holders are called stockholder or
shareholder.
b. Bonds – are debt instruments issued by private companies and government
entities to borrow large sums of money that no single financial institution may
be willing or able to lend.
c. Long-term Negotiable Certificates of Deposit – are negotiable certificates of
deposit with designated maturity or tenor beyond 1 year, representing a
bank’s obligation to pay the face value upon maturity, as well as periodic
coupon or interest payments during the life of the deposit.
d. Mortgage-backed Securities - is an investment similar to a bond that is made
up of a bundle of home loans bought from the banks that issued them.
Investors in MBS receive periodic payments similar to bond coupon
payments.

FINANCIAL INTERMEDIATION

Financial Intermediaries
- are the financial institutions that act as bridge between investors or savers and
borrowers or security issuers.
- A financial intermediary is an entity that acts as the middleman between two parties
in a financial transaction, such as a commercial bank, investment bank, mutual
fund, or pension fund.

DIRECT AND INDIRECT FINANCE

 Direct Finance- obtaining funds directly.

 

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 Indirect Finance is a result of financial intermediation.

CLASSIFICATION OF FINANCIAL INTERMEDIARIES

A. Depository institutions
– these are financial institutions that accept deposits from surplus units.
B. Non-depository institutions
- these issue contracts that are not deposits and perform financial intermediation.

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Note: FM103: Banking and Financial Institutions subject comprehensively discusses the
depository institutions.

A. DEPOSITORY INSTITUTIONS
1. Commercial banks
- the biggest of the depository institution.
- They have been the pioneers in financial intermediation.
a. ordinary commercial banks
- They perform simple functions of accepting deposits and granting loans
b. Expanded commercial or universal banks
- It is a combination of commercial banks and an investment house
- They perform expanded commercial banking functions and
underwriting functions of an investment house
2. Thrift banks
- They cater to the needs of households, agriculture and industry.
- They encourage the habit of thrift and savings and provide loans at
reasonable rates.
a. savings and mortgage banks
- These are banks specializing in granting mortgage loans other than the
basic function of accepting deposits.
- Mortgage banks do not accept deposits but accepts loans
b. savings and loans associations
- They accumulate savings of their depositors/stockholders and use
these accumulated savings, together with their capital for the loans that
they grant and for investments in government and private securities.
c. private development banks
- They cater to the needs of agriculture and industry providing them with
reasonable rate loans for medium- and long-term purposes.
d. microfinance thrift banks
- These are small thrift banks that cater to small, micro, and cottage
industries, hence, the term “micro”
e. credit unions
- These are cooperatives organized by people from the same
organization like farmers, fishermen, teachers, sailors, employees, etc.
3. Rural banks and cooperative banks
- These are more popular type of banks in the rural communities.
- Their role is to promote and expand the rural economy in an orderly and
effective manner by providing the people in the rural communities with basic
financial services (ex. Helping farmers through the stages of production from
buying seedlings to marketing their produce)

B. NON-DEPOSITORY INSTITUTIONS
1. Insurance companies
a. life insurance companies
- These are financial intermediaries that sell life insurance policies
b. property/casualty insurance companies
- They offer protection against pure risk.
- They offer protection against injury or property loss resulting from
accidents, work-related injuries, malpractice, natural calamities and the

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like.
- It gives protection against property loss to one’s business, home or car
and against legal liability that may result form injury or damage to
property of others
2. Fund managers
a. pension fund companies
- Sells contracts to provide income to policyholders during their
retirement years
b. mutual fund companies
- They allow investors to purchase mutual funds that buy different
securities in the securities market like stocks, long-term bonds or short-
term debt instruments issued by businesses or government units.
3. Investment banks/houses/companies
- They are financial intermediaries that pool relatively small amount of
investor’s money to finance large portfolios of investments that justify the cost
of professional management. By pooling funds, these organizations reduce
the risks of diversification.
4. Finance companies
- These are profit-oriented financial institutions that borrow and lend funds to
households and businesses.
5. Security dealers and brokers
- Security brokers act as financial intermediaries in a sense that they look for
investors or savings units for the benefit of the borrowers or deficit unit.
- Security dealers buys securities and resells them and make a profit on the
difference between their purchase price and their selling price.
6. Pawnshops
- These are agencies where people and some small businesses “pawn” their
assets as collateral in exchange of an amount much smaller value that the
value of the asset.
7. Trust companies and departments
- These are corporations organized for the purpose of accepting and executing
trusts and acting as trustee under wills, as executor, or as guardian.
8. Lending investors
- These are individuals or companies who loan funds to borrowers, generally
consumers or households.

To learn more about this lesson, please refer to reference cited on the last page of this
module.

LEARNING ACTIVITY 1

Reflection on Learning:
 Discuss the meaning of financial system. What is the importance to the nation?
 Discuss the role of each of the participants in the financial system play.
 What is the importance of financial markets in a nation’s economy? Discuss your
answer.
 Differentiate money market from capital market; money market instruments from
capital market instruments.

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 FM-AA-CIA-15 Rev. 0 10-July-2020

Study Guide in FM 107: Capital Market Module No. ____

 What is financial intermediation? What are financial intermediaries?

 Discuss the asset transformation role of the financial intermediary by giving specific
examples.

Learning Activity:
 Prepare for a recitation or oral/written participation.
 Prepare for a quiz after discussion.

SUMMARY

 Financial system encompasses the financial markets, participants and instruments

dealt with in said markets.
 There are six participants or sectors in the financial system.
 Financial markets are structures through which funds flow. They are the institutions
and systems that facilitate transactions in all types of financial claims.
 Financial instruments are contracts for monetary assets that can be purchased,
traded, created, modified or settled for.
 CMIP is a non-stock, non-profit organization whose members are active practitioners
in the Philippine capital market, professional and leaders in academic community.
 Financial intermediaries play an important role in the socio-economic development of
the country, in general, and of urban and rural areas, in particular.

REFERENCES
REFERENCES

 Fabozzi, Frank J. and Pamela Peterson Drake (2009). Capital Markets, Financial
Management and Investment Management. John Wiley & Sons, Inc.
https://www.academia.edu/34595245/Book_Finance_Capital_Markets_Financial_Ma
nagement_and_Investment_Management_2009_Fabozzi?
fbclid=IwAR0FcM9GgBwRz-hmQQfttNRDCB4wYddKbNMG5hQUHb-
oJJ7Elf2MalIkWI4
 Lopez-Mariano, Norma D (2017). Capital Markets. Rex Bookstore Inc.
 Kagan, Julia (2021). Letter of Credit. Investopedia.
https://www.investopedia.com/terms/l/letterofcredit.asp
 Chen, James (2021). What is Eurodollar? Investopedia.
https://www.investopedia.com/terms/e/eurodollar.asp
 Gatdula, Donnabelle (2005). BSP Hails Capital Market Institute. Philippine Star.
https://www.philstar.com/business/2005/10/09/300889/bsp-hails-capital-market-
institute
 Beechmont Toyota (n.d). What are Direct and Indirect Finance?
https://www.beechmonttoyota.com/finance/car-buying-tips/direct-vs-indirect-finance/
 Corporate Finance Institute (n.d). Financial Instrument.
https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/
financial-instrument/

PANGASINAN STATE UNIVERSITY 16

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Study Guide in FM 107: Capital Market Module No. ____

PANGASINAN STATE UNIVERSITY 17