Student’s Name: Ekateryna Calderón Hernández
Nua: 391880
After watching the video, answer the following questions in complete sentences.
What is Finance?
Finance studies the exchange of capital between stakeholders the risk it carries.
What is Financial System?
The financial system deals with the financial transactions and the exchange of money between savers, investors, lenders and borrowers.
They're made of different intricate and complex models that link financial institutions and markets to provide financial services from various stockholders
What are the functions of a financial system?
- It provides payment system for the exchange of goods and services.
- It's a mechanism to pull the funds in terms of household savings.
- It provides the financial capital for long term capital formation for the gov and businesses.
- It facilitates the investors and other market participants to liquidate their investment alternatives like stocks and bonds.
- It provides the avenues for managing the risks faced by the market.
- It helps in efficient allocation of financial resources
- It plays a significant role for economic growth as it helps to create the demand and supply of the funds
How are the main types of financial institutions categorized? Describe each one.
- Banking and non banking
They provide transactional services and are subject to legal reserve requirements. Banks are creators of credit, and non banking institutions are purveyors of credit.
- Intermediaries vs. Non intermediaries
They are the middle man between savers and investors, the lend money and mobilise savings, their liabilities are toward the ultimate savers while their assets are from the investors.
Which are the main classes of financial instruments issued in a financial system? Describe them in detail.
- Derivative Instruments: like future stocks
- Cash Instruments: It is an instrument evaluated by the market.
- Debt-based instruments: these types of instruments are short-term, so their risk is lower.
What are the distinctions between various types of financial markets according to their function? Explain them.
- Money and Capital Markets
Money markets deal in the short term claims (1 year or less), the capital markets does so in the long term
- Primary and Secondary markets
The first deals in the new financial or new securities, the secondary deals with securities already issued or existing
What does the “flow of funds” refer to? Explain in detail.
They are a system of interrelated balances for a nation, calculated periodically that track the movement of money among industries or sectors of the economy.
Write a final reflection on the topic, mentioning what were the most important aspects you learned.
It is clear that financial literacy is esential to everyone ans that's because in the finanicial markets we can control the allocation and spending of funds, as well as the reporting of financial data to ensure that objectives can be met and profits made, whilst ensuring the effective operation our savings or businesses.
Certainly financial issues have regained a lot of importance and curiosity in recent years, and I like that you mention on your blog that finances are essential for everyone, in almost every aspects of our daily lives. Thanks for sharing, I liked it :)
ReplyDeleteI believe that the financial instruments that you selected are the most important ones to have in consideration in the Financial system.
ReplyDeleteThe topic of finance for me was something unknown but thanks to these questions I have expanded my knowledge, I hope that you have also learned a lot
ReplyDeleteI agree with you, the financial system is essential and during this activity I was surprised to realize that there are several parties involved in financial transactions such as savers and lenders.
ReplyDeleteI like the way you explained the main financial instruments. That's a topic that has always been a little bit difficult for me to understad, but I believe that you explained them really well and concise, so I could understand them. Thank you for the info!
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