Basic finance

Module 3 Output

5:00-6:00 pm MWF

Submitted to:
Ma’am Genevieve Sagandoy

Submitted by: Kryzal B. Gansowen

BSA 2
PRE-TEST
1. What is the name of the central bank of the Philippines?
c. Bangko Sentral ng Pilipinas
2. The function of the BSP which gives them the sole authority to legally issue
money, in paper, notes, and coins in the amounts consistent with the country’s
economic program.
c. The BSP as the Supplier of Money
3 The current name of Banco Espanol-Filipino de Isabel II.
c. Bank of the Philippine Islands
4. The number of the members of the Monetary Board.
c. 7
5. The policy-making body of the Bangko Sentral ng Pilipinas.
b. Monetary Board
6. An instrument of monetary policy which seeks to control the total quantity of
money and bank credit or to make the bank lend more or less.
d. Quantitative Control
7. It deals with financing businesses that operates across the geographical
frontiers.
c. International Business Finance
8. It is a platform where buyers and sellers are involved in the sale and purchase if
financial products like shares, mutual funds, bonds, and so on.
b. Financial Market
9. It refers to the appeal to the commercial bank to act according to the directive of
the central bank.
b. Direct Action
10. A network of various institutions which generates, circulates, and controls
money and credit.
c. Financial System

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LESSON 1: FINANCIAL SYSTEM
Activity 1. Essay. 10 Points
1. Give 3 importance of banks and other lending institutions.
a. Source of Capital- The main operations of banks and financial institutions
is providing loan services to the public. With such, they serve as capital
providers to both start-ups and already existing businesses who want to
expand their operations. For example, a licensed pharmacist wants to put
up her own pharmacy. Let us say that she has been working for 3 years in a
private institution with a net salary of P120,000 annually. It is estimated
that she would be needing at least P700,000.00 capital for her business.
Considering that her savings are not enough, where would she get the
additional capital? And if she waited out and worked for more years to earn
for the target capital, it would take really long for her to put up the
business. Plus, inflation can also affect her target capital and even make it
higher as time passes.

b. Bridge for International Transactions- Through the different

interconnected networks of banks, especially those with international
operations like the commercial banks, transacting business beyond the state
barriers are easier. By providing interbank money transfers and even
providing foreign currency exchange services, paying for products and
services, as well as receiving payments and salaries are very convenient.
Example of this is the Virtual Assistants here in the Philippines who work
for companies abroad. They receive their salaries through bank transfers in
dollars, with which they convert into pesos during withdrawals. Another is
online shopping. A Filipino citizen can order items from Amazon, an
international online shopping platform and pay via his bank account.

c. Safe Storage- Storing your hard-earned money in financial institutions

insured by the PDIC,IC, or other recognized insurance institutions gives you
a guarantee on its safety. As compared to the traditional way of saving, like
by using piggy banks, baul, caja de oro, or any other different means, the
risk is reduced largely. Banks are mostly, if not all, insured as they are
statutorily required to maintain reserves so as not to prejudice their
creditors and depositors. This is because the depositors are one of their
major financial providers of funds which they use to loan out to their
debtors and also invest to earn income. In exchange, the depositors get to
earn interest income from their deposits and are guaranteed with a
maximum of P500,000.00 insurance per account. So, in case of a loss or
bankruptcy, you do not loss much or all of your savings.

2. Enumerate at least 3 financial institutions where you availed of a service

or a product. Identify the product or service that you were able to avail.
Give your impressions with regards to the service or product.
a. Treasure Link Cooperative Society- Being a member of this cooperative
gives me advantages. I get to have a savings account which earns larger
interests as compared to banks, annual dividends of my share capital,
patronage refunds, at the same time, avail of their loan services. This
cooperative has been expanding continuously during its 18 years of
existence and with it, their services has also been expanding. Aside from the
different insured loan programs they offer, they also do money transfer,
Gcash and PayMaya transactions, and other more.

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 b. Philippine National Bank- Opening a savings account with this bank
provides me the convenience of paying bills and purchases through their
mobile application. Also, as compared to other commercial banks, they offer
a lower maintaining balance on savings accounts. It is one of the oldest
banks in the Philippines and has a great reputation, making it trustworthy.

c. PhilHealth- This is a government-owned health insurance institution. It has

always provided financial help to me whenever I or my beneficiaries needed
to be hospitalized. It relieves one of the burdens of having to think of where
to get the finances for such unexpected events and emergencies.

3. Do you think markets are needed for the economy? Why or why not?
Justify your answer.
Whether we accept it or not, the different markets are needed for economic
growth and development. Markets are the main venues for trade and where the
different economic participants meet to negotiate, provide supply, and state
their demands. Entities trade for the purpose of making income. And they need
income to be able to sustain their own wants and needs. Where else is a better
place of earning income if not at the markets? An established market for
products and services provides the participants security of earning legally, more
chances of selling their products and services, and also availing of the same at
regulated prices and quality.
The beauty of having markets provide entities benchmarks and source for their
products and services, the prices, bases for demands, and many more. With a
market, people know where and how to do their transactions, therefore keeping
the economy active and in a cycle. An active economy induces growth and
development. The more transactions happening in a market, the higher the
probability of employment demands for manufacturing and production, and
even for services. The higher the employment rate, the more chances of
economy to develop and shall lessen poverty.

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LESSON 2: INTERNATIONAL BUSINESS FINANCE
Activity 2.
1. In your own words, give a brief and concise description on business
finance.
Business finance is all about how an entity outsources money for its operations,
how they manage the money to make sure it is properly utilized, and how to use
it to provide the entity maximum profits. An example of this is when a company
wants to expand yet needs to choose the best option as to where to get the
funds needed. They can either issue bonds, stocks, or loan, or simply use their
internally generated funds. They now weigh the cost of each and how much
financing they can get. Which one provides the closest amount to the funding
needed while also considering the interest and other expenses entailed with it.
Another, if they are going to loan or issue bonds, how long is the term until they
have to pay them back? If they are going to issue stocks, would it affect their
percentage of ownership and control of the company? If they are going to use
their currently existing funds, would it be enough? A lot of factors need to be
considered in terms of business finance.

2. In the table for foreign currencies, complete the currency unit of each
country.

FOREIGN CURRENCIES

COUNTRY CURRENCY
United States of America US Dollar/ United States Dollar
Japan Japanese Yen
United Kingdom Pound Sterling
Hong Kong Hong Kong Dollar
Switzerland Swiss franc
Canada Canadian Dollar
Singapore Singapore dollar
Australia Australian Dollar
Bahrain Bahraini Dinar
Brunei Brunei Dollar
Indonesia Indonesian Rupiah
Thailand Thai baht
United Arab Emirates UAE dirham
European Union European euro
South Korea South Korean won
China Chinese Yuan Renminbi
Saudi Arabia Saudi Arabian riyal

3. In your opinion, is there a need to transact businesses with other

countries?
Transacting businesses beyond the national borders has always been
necessary. As the saying goes, “”No man is an island”, a country may be able to
survive only by using its own resources, but will its economy prosper? A very
well-known example to this is the North Korea. Yes, they have been fending for
themselves since time immemorial but as to their economy’s state, it is
saddening to say that it is stagnated, if not going down the drain. By doing
business on an international level, one country can provide another country its
needs, and vice versa. Not only does a country gets the commodities that it
cannot suffice for itself, but it can also earn its revenues through tariffs on
imports and exports.
For example, the Philippines outsources its oil from other countries. Before the
war between Russia and Ukraine, the price of the commodities here in the
Philippines were still not very burdensome. But ever since Russia retracted

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 from supplying oil to the Philippines, almost everything doubled, even tripled in
price. With that alone, we can see the effect of having to provide for ourselves,
or of having no substitute supplier. While tariffs are taxes imposed on imported
goods. Before, it was also imposed on exports but was reformed. Side from that,
a country can also export to other countries their surplus products in addition
to those it usually exports. This way, the producers and manufacturers of such
do not have to face losses by giving them out at a bargain price within the
locality, or worse, thrown out, like what happens to farm produce.

POST ASSESSMENT:
1. This is the price of one country’s currency expressed in terms of another
country’s currency.
d. Exchange Rate
2. An over-the-counter market where one country’s currency is traded for another
country’s currency.
b. Foreign Exchange Market
3. A financial institution that caters to the financial needs and insurance of
government workers where premiums are paid by said employees and their employers.
c. GSIS
4. The appointing authority of the members of the Monetary Board.
d. The President
5. The Chairman of the Monetary Board.
c. Governor of the BSP
6. The most common form of stocks.
b. Common Stocks
7. These are basically investment funds which charge a performance fee.
a. Hedge Funds
8. The most important instrument of monetary policy which refers to the purchase or
sale of government securities, short term as well as long term, at the initiative of the
central bank, as deliberate credit policy.
d. Open Market Operation
9. The currency reserve fund that was set up in order to maintain the value of the
peso with gold.
b. Gold Reserve Fund
10. The government agency responsible for maintaining price stability conducive to a
balanced and sustainable growth of the economy.
a. Bangko Sentral ng Pilipinas

-End of Module 3-

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