Roxanne Babe B. Castro ABM-1: Let's Dig in

Roxanne Babe B.
Castro
ABM-1
Let's Dig In
1.2
Advantages of Financial Instruments

According to the risk-bearing capacity of counterparties, financial instruments
allocate risks. Companies can use financial instruments to hedge currencies for future
uncertainties.
Equity-based instruments are a permanent source of funds for businesses because
equity shares allow businesses to have a good option of borrowing and enjoy retained
earnings.
Disadvantages of Financial Instruments

Liquid assets like cash deposits and money market accounts will not allow to
withdraw funds for a specified time mentioned Qin the agreement.
If a company wants to withdraw before maturity period, they may get lower returns.
Swaps is a financial instrument which carries higher level of risks.
It can be stated at the end that proper management of financial instruments can help
organizations in cutting down costs and maximizing their revenue model.
Example
-non-puttable ordinary shares,

-some puttable instruments (see paragraphs 16A and 168 of IAS 32),
-some instruments that impose on the entity an obligation to deliver to another party a
pro rata share of the net assets of the entity only
on liquidation (see paragraphs 16C and 16D of IAS 32),
-some types of preference shares (see paragraphs AG25 and AG26 of
IAS 32), and
-Warrants or written call option that allow the holder to subscribe for or purchase a
fixed number of non-puttable ordinary shares in
the issuing entity in exchange for a fixed amount of cash or another financial asset.
1.2
1.2.1
Universal Banking facilitates the functions of more than one type of bank and
provides facilities of commercial banking and Investment Banking.
1.2.2
A commercial bank provides banking services to businesses, institutions and some
individuals. The money it takes in from its customers is deposited at its local central
bank.
1.2.3
Thirft banks, meanwhile, are composed of savings and mortgage banks, private
development banks, stock savings and loan associations, and microfinance thrift
banks. They are essentially engaged in accumulating savings of depositors and
investing them, providing short-term working capital and medium- and long-term
financing to businesses engaged in agriculture, services, industry and housing, and
diversified financial and allied services, and to their chosen markets, especially small-
and medium- enterprises and individuals.
1.2.4
rural bank are most familiar to thos eliving in rural or provincial areas. Their role is to
“promote and expand the rural economy in an orderly and effective manner” by
providing basic financial services. Many rural and cooperative banks help farmers
through the stages of production, from buying seedlings to marketing of their produce.
These banks are also differentiated from each other by ownership; while rural banks
are privately owned and managed, cooperative banks are organized/owned by
cooperatives or federation of cooperatives.
1.3
A "money" market is places of exchange for debt instruments with an original

maturity of less than one year. A "capital" market is places of exchange for debt
instruments with an original maturity of more than one year and also the market for
equity securities (common stocks and preferred stocks).
1.4
Commercial banks have a critical part in the general financial position of the economy
as they give assets to various purposes and additionally for various durations
1.5
An initial public offering (IPO) refers to the process of offering shares of a private
corporation to the public in a new stock issuance. An IPO allows a company to raise
capital from public investors.
It takes place when shares in a privately held company are first listed on a stock
exchange.
1.6
A corporation is an organization a group of people or a company that has been
permitted by the state to act as a single entity and is legally recognized as for certain
purposes. Charters were used to establish the first incorporated entitles. The majorty
of governments currently permit the formation of new corporations via registration.
The (1) board of directors, (2 executives, (3) employees, and (4) shareholders or the
make up the corporate organization structure. They each play a part in thecompany's
decision making process. The board af
directors' job Is to preserve shareholders' money whille also reporting on the
comgarnty's success and advancement. The board of directors is the entity that
appoints the officers, who are the President or CEO.Vice-President. The Secretary, as
well as Treasurer.
The CEO Is ultimately responsible for the
corporation's actions, and he or she signs contracts and other legaly enforceable
documents on the company's behalf. The Vice-President is in charge of the
corporation's day-to-day affairs. Almost all of the corporation's financial affairs are
handled by the Treasurer. The corporation's secretary is responsible for keeping and
malntaining the corporation's records, documents, and minutes according to
sharehalder meetings. Employees are responsible for making the company run by
performing numerous tasks related to the company's objective. The shareholders are
responsible for ensuring that the business is well-managed. They keep an eye on the
company's performance and voice their concerns by giving their approval to the
company's management decisions.
II. LETS APPLY
II.1
Commercial banks, play an important role in the overall financial health of the
economy since they lend assets for a variety of purposes and for varied periods of
time. A fee is charged by banks for taking out a loan. Cash credits, overdrafts, term
loans, bill purchase/discounting, and letter of credit are all examples of commercial
bank loans to firms. Commercial banks, like the rest of the financial system,
contribute to economic development by offering payment services that minimize risk
for firms, matching savings and investment for individuals and enterprises, more
efficiently allocating credit, and assisting with asset liquidity.
II.2
Role of finacial managers

The financial manager is in charge of financial planning, investing (spending money),
and financing (raising money). The major goal of the financial manager is to
maximize the company's value, and his or her decisions frequently have long-term
effects. After learning the definition and characteristics of a financial manager.
Because financial managers, like me, have strategic and analytic talents, I believe I
can relate to the function of financial manager. I am capable at gathering information
and properly analyzing that information. Financial managers are also accountable
because they are in charge of finances.
Role of finacial market

Any marketplace where securities are traded, such as the stock market, bond market,
currency market, and derivatives market, to mention a few, is considered a financial
market. For capitalist economies to function correctly, financial markets are required.
Financial markets, play a vital role in resource allocation and modern economy
operation. Financial markets offer items to persons with additional capital
(investors/lenders) who want to make a profit. enable these funds to be distributed to
people who are in need (bomowers)
Role of Investors
An investor is the most common market participant linked with the stock market.
Investors are individuals who purchase a company's stock with the intention of
holding it for a long time because they feel it has a promising future. Investors, in my
opinion, are a crucial component of a company's success and growth. As a result, it is
vital for firms to establish good, honest relationships with investors. This is where an
organization's investor relations team comes in helpful.

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Roxanne Babe B.

Advantages of Financial Instruments

Disadvantages of Financial Instruments

-non-puttable ordinary shares,

A "money" market is places of exchange for debt instruments with an original

II. LETS APPLY

Role of finacial managers

Role of finacial market

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