1.

Refers to the application of economic principles to decision-making that involves the allocation
of money under conditions of uncertainty.
2. It provides the platform by which funds are transferred from those entities that have funds to
invest to those entities that need funds to invest.
3. This is often referred to as corporate finance.
4. This is the specialty area within finance dealing with the management of individual or
institutional funds.
5. This is added to the rate of return to compensate investors for taking risks.
6. This is concerned with financial record keeping, the production of periodic reports, statements,
and analyses, and the dissemination of information to managers.
7. The minimum contents of the report to shareholders are prescribed by _________________.
8. The term is used to describe how companies are directed and controlled.
9. This refers to the timely release of all information about a company that may influence an
investor's decision.
10. This principle restricts directors to benefit from access to inside information that is not available
to shareholders.
11. This involves defining the roles and duties of the directors and establishing an adequate
monitoring process.
12. It 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.
13. The value of this depends on its physical properties. Buildings, aircraft, land, and machinery are
examples of this.
14. This is another term used for a financial asset.
15. This term is used to describe the party that has agreed to make future cash payments.
16. This term is used to describe the party that owns the financial instruments and therefore the right
to receive the payments made by the issuer.
17. This is a financial instrument in which the issuer agrees to pay the investor interest plus repay the
amount borrowed.
18. A debt instrument also referred to as an ______________, can be in the form of a note, bond, or
loan.
19. This specifies that the issuer pays the investor an amount based on earnings, if any, after the
obligations that the issuer is required to make to investors of the firm’s debt instruments have
been paid.
20. Because preferred stockholders typically are entitled to a fixed contractual amount, preferred
stock is referred to as __________________.
21. It means that the interactions of buyers and sellers in a financial market determine the price of the
traded asset. Equivalently, they determine the required return that participants in the financial
market demand to buy a financial instrument.
22. It includes depository institutions, insurance companies, regulated investment companies,
investment banks, and insurance companies.
23. This economic function performed by financial intermediaries of transforming more risky assets
into less risky ones is called _____________.
24. It is popularly referred to as T-bills are short-term securities issued by the government.
25. This is a promissory note—a written promise to pay—issued by a large, creditworthy corporation
or a municipality.
26. This is defined as a financial market where asset prices rapidly reflect all available information.
This means that all available information is already impounded in an asset’s price, so investors
 should expect to earn a return necessary to compensate them for their opportunity cost,
anticipated inflation, and risk.
27. This includes loans to both non-financial and financial corporations’ government entities.
28. This is, more popularly known as checking accounts can be withdrawn upon demand and offer
minimal interest.
29. This pay interest (typically below-market interest rates), does not have a specific maturity, and
usually can be withdrawn upon demand.
30. This is referred to as a time deposit, have a fixed maturity date, and pay either a fixed or floating
interest rate.
31. This is a demand account that pays interest based on short-term interest rates.
32. In this type of insurance, the risk insured is the cost of medical treatment for the insured.
33. These firms manage the funds of individuals, businesses, and state and local governments and are
compensated for this service by fees that they charge.
34. These companies are financial intermediaries that sell shares to the public and invest those
proceeds in a diversified portfolio of securities.
35. This engages in a variety of investment activities. They cater to sophisticated investors and are
not subject to the regulations that apply to mutual funds geared toward the general public.
36. This is established for the eventual payment of retirement benefits.
37. This is a combination of a defined benefit and a defined contribution plan with the most common
type being a cash balance plan.
38. In a firm commitment arrangement, this purchases the newly issued security from the issuer at a
fixed price and then sells the security to the public.
39. This referred to the activity of borrowing funds or borrowing securities.
40. This includes foundations and endowments. These organizations are not motivated by profit or
any monetary gain.
41. This is an international entity that is created by two or more central governments through
international treaties.
42. They provide; in a minority of cases of it - much of the semi-permanent finance of companies.
43. These are issued by the company to investors who are prepared to expose themselves to risk in
order also to expose themselves to the expectation of high investment returns, which both
intuition and evidence, is associated with risk.
44. These are frequently referred to as equities.
45. These are often portrayed as being the reward of the shareholders, in much the same way as a
payment of interest is the reward of the lender.
46. These represent part of the risk-bearing ownership of the company, although they usually confer
on their holders a right to receive the first slice of any dividend that is paid.
47. These in finance and economics is the process of bringing a business to an end and distributing its
assets to claimants.
48. These would tend to be loan creditors (those that have lent money to the company). Where the
security is on a specified asset or group of assets, the proceeds of disposal of the asset are to be
applied to meeting the specific claim.
49. These are assets or obligations whose value is dependent on some asset from which they are
derived.
50. A venture capital fund pools finance from various investors (very rich private individuals and
institutions).
51. This refers to a type of credit vehicle in which a sum of money is lent to another party in
exchange for future repayment of the value or principal amount.
52. This is the central bank of the Republic of the Philippines.
53. They are responsible for developing the BSFI’s consumer protection strategy and establishing an
effective oversight over the BSFI’s consumer protection programs.
54. Their audit function should review its consumer protection practices, adherence to internal
policies and procedures, and compliance with existing laws, rules, and regulations.
55. When they are applying for a loan, they must submit an application stating the purpose of the loan
and such other information as may be required by the NSSLA.
56. For each loan granted by them, a promissory note must be executed by the member-borrower in
favor of this association expressing such particulars as the amount of the loan, date granted, due
date, interest rate, and other similar information.
57. This is a method of achieving the goal of maximizing shareholder wealth.
58. This is a plan of action of how to reach an objective. And just as some routes may get you where
you are going faster, some of these may be better than others.
59. This is mapping out the sources and uses of funds for future periods.
60. This is the advantage one company has over others in terms of the cost of producing or
distributing goods or services.
61. To add this, management must focus on the returns and risks of future cash flows to stockholders.
62. This allocates a firm’s resources to achieve its investment objectives.
63. This is budgeting for the short term (less than a year).
64. This is budgeting for the long term (typically three to five years ahead).
65. This is a statistical method that enables us to fit a straight line that on average represents the best
possible graphical relationship between sales and time.
66. These are the studies of customers that can provide estimates of future revenues.
67. This is an important element in planning for both the short-term and the long-term. But
predictions are made by people. Predictors tend to be optimistic, which usually results in rosier-
than-deserved estimates of future sales.
68. This can be used is to simply extrapolate future sales based on the trend in past sales.
69. This is an important part of financial planning. Inaccurate guesses can result in shortages of
inventory, inadequate short-term financing arrangements, and so on.
70. This is generally beginning four to six months before the end of the current fiscal period.
71. This helps managers assess the impact of a particular strategy on their firm’s financial position,
its cash flows, its reported earnings, and its need for external financing.
72. An alternative and more precise method are to look at this—how long each account has been
outstanding—and use this information to track collections.
73. In these, we bring together analyses of cash flows, projected income statements, and projected
balance sheets. The cash flow analyses are most important, though the financial management staff
needs to generate the income statement and balance sheet as well.
74. As with these, there is a relation between expenses and cash disbursements.
75. This ratio indicates how long it takes, on average, to collect on accounts receivable.
76. An idea of the time it takes to pay for purchases on account of the number of days of purchases
can be obtained from the following ratio.
77. This is a detailed statement of the cash inflows and outflows expected in future periods.
78. This can also be used to compare actual cash flows against planned cash flows so that
management can evaluate both management’s performance and management’s forecasting ability.
79. Using this, along with a host of assumptions about credit sales, collections on accounts
receivable, payments for purchases, and financing, we can construct a cash budget, which tells us
about the cash inflows and the cash outflows.
80. This allows management to develop a probability distribution of possible outcomes, given a
probability distribution for each variable that may change.
81. Operations, such as receipts from sales and collections on accounts receivable.
82. The results of financing decisions, such as borrowings, sales of shares of common stock, and
sales of preferred stock.
83. The results of investment decisions, such as sales of assets and income from marketable
securities.
84. Operations, such as payments on accounts payable, purchases of goods, and the payment of taxes.
85. Financing obligations, such as the payment of dividends and interest, and the repurchase of shares
of stock, or the redemption of bonds.
86. Investments, such as the purchase of plants and equipment.
87. It is a projected balance sheet for a future period.
88. It is the projected income statement for a future period.
89. These help management identify the company’s investment and financing needs.
90. These are two ways of projecting financial statements.
91. The analysis of the account’s method starts with this.
92. Management can see how the cash budget interacts with the pro forma income statement and
balance sheet by looking at the change in this.
93. This uses historical relationships between sales and each of the other income statement accounts
and between sales and each of the balance sheet accounts.
94. Management is interested in these not just as a product of the cash flow analysis.
95. This is analyzing how much and when cash is needed, and how much and when to generate it.
This requires pulling together and consolidating the short-term projections that relate to cash
inflows and outflows.
96. This begins when the firm invests cash in the raw materials used to produce its goods or services
and ends with the collection of cash for the sale of those same goods or services.
97. This comprises both currency and assets that are immediately transformable into cash.
98. These are securities that can be readily sold when cash is needed.
99. These are amounts due from customers who have purchased the firm’s goods or services but
haven’t yet paid for them.
100. These are assets that could reasonably be converted into cash within one operating cycle
or one year, whichever takes longer.
101. This is the capital that managers can immediately put to work to generate the benefits of
capital investment. This is also known as current capital or circulating capital.
102. This can be calculated by determining first the effective interest cost for the period of
credit and then placing this effective cost on an annual basis so that we can compare it with the
cost of other forms of credit.
103. This specifies the terms of extending credit, deciding who gets credit, and procedures for
collecting delinquent accounts.
104. This consists of the maximum amount of credit, the length of the period allowed for
payment (that is, the net period), and the discount rate and discount period if any.
105. The ability of the customer to pay.
106. The willingness of the customer to pay debts.
107. The ability of creditors to collect on bad debts if the customer liquidates its assets.
108. The sensitivity of the customer’s ability to pay to underlying economic and market
factors.
109. In setting this, management must consider the cost of these sources, such as fees for
credit reports, as well as the costs of personnel and other resources in evaluating the information
contained in the credit reports.
110. This are tools used in the valuation and the determination of yields on investments and
costs of financing arrangements.
111. Translating a current value into its equivalent future value is referred to as this.
112. Translating a future cash flow or value into its equivalent value in a prior period is
referred to as this.
113. This repeats itself in the same way from one period to the next as long as you take out the
interest at the end of each period and the principal remains the same.
114. Earning interest on interest is called this because the balance at any time is a combination
of the principal, interest on the principal, and interest on accumulated interest.
115. We can express the change in the value of the savings balance (that is, the difference
between the ending value and the beginning value) as a this.
116. This is an income on an investment, generally stated as a change in the value of the
investment over each period divided by the amount at the investment at the beginning of the
period.
117. A common investment product of a life insurance company is this. With this investment,
an insurance company guarantees a specified interest rate for years.
118. Because interest rates are often quoted in terms of this, we need to be able to translate this
into an interest rate per period and to adjust the number of periods.
119. This ignores the process of compounding.
120. The correct way of calculating the average annual return is to use this.
121. The annual return on the investment—sometimes referred to as this.
122. The extreme frequency of compounding is this, in which compounded instantaneously.
123. Sometimes referred to as the compound average annual return.
124. This stems from the nature of forecasts of the timing and the number of cash flows.
125. This is the process of calculating the loan payments that amortize the loaned amount.
126. We can determine the amount of this once we know the frequency of payments, the
interest rate, and the number of payments.
127. The loan payments are determined such that after the last payment is made there is no
loan balance outstanding. Thus, the loan is referred to as this.
128. As the payments are made, the remainder is applied to repayment of the principal, which
is referred to as the scheduled principal repayment.
129. By calculating this implied interest rate, we can then compare investment or financing
opportunities.
130. The annualized rate.
131. This is the true economic return for a given period—it takes into account the
compounding of interest—and is also referred to as the effective rate of interest.
132. This is the annual rate of growth that an investment is expected to generate.
133. This is calculated using the same concept as net present value (NPV), except it sets the
NPV equal to zero.
134. This is ideal for analyzing capital budgeting projects to understand and compare potential
rates of annual return over time.
135. This is the total rate of return that will have been earned by a bond when it makes all
interest payments and repays the original principal.
136. This is essentially a bond's internal rate of return (IRR) if held to maturity.
137. Calculating this can be a complicated process, and it assumes all coupon or interest,
payments can be reinvested at the same rate of return as the bond.
138. This indicates that a company’s liquidity position is strong or increasing.
139. This indicates that a company’s liquidity position is weak or shrinking.