FINP5 MID TERM EXAMINATION REVIEWER

Investment Management- refers to the process of defining investment objectives, adopting, and
executing strategies to optimize results considering the risk involved and evaluating performance
periodically.

Investing – has a main purpose of reducing financial worries

Investment- refers to assets acquired to realize income and earn profit

Portfolio- refers to the briefcase that is used in carrying business papers and documents. This refers to
the aggregate of assets held as investment.

Compounded Growth- refers to the growth in investment portfolio brought about by plowing back the
earnings therefrom.

Forms of Investment (Savings Account, Time Deposit, Special Savings Deposit, Trust Investments,
Treasury Bills, Commercial Papers, Mutual Funds, Bonds, Share of stock)

Asset Allocation- allocation of the investment portfolio across abroad asset classes.

Volatile Investment- An investment that can change quickly without warning

Derivatives- these are financial instruments the value of which is derived from the value of other assets.

Options- this refer to the right but not the obligation to buy or sell something at the specified price,
specified date or time./ It can also help investors manage risk

Future Contracts – are forward type contracts wherein buyer and seller are committed to trading a
given asset at a set price on fixed date.

Return- refers to the growth in the value of an investment

Investment Risk – is most appropriately understood as a chance that an investment will suffer a loss

Financial Risk- is a risk associated with financial changes in the overall economy.

Holding Period- it is always happen in a year.

Savings- is the portion of current income not spent on consumption

Liquidity- is the ability of an investment to be converted into cash quickly without loss of value

Financial Market main characteristic is channels fund from lender-savers to borrower-spenders.

Time value of Money- refers to the act that a dollar in hand today is worth more than a dollar promised
in the future time.

Future Value- refers to the amount of money to which an investment will grow over a finite time at a
given interest rate.

Investors- they can purchase a new issues of securities in the primary market
Investment Banks- it is the firm that specialize in helping companies raise capital by selling securities

Portfolio Manager- with a passive investment strategy will manage a portfolio by holding diversified
portfolio.

Brokers- Intermediaries who are agents of investors and match buyers with sellers of securities.

Dealer- intermediaries who link buyers and sellers by buying and selling securities at stated price.

Risk Sources- are fundamental drivers that cause risks in a project or organization.

Sources of Risk in Agricultural Operation (Production Risk, Marketing Risk, Financial Risk, legal risk and
human resource risk)

Investment Banks- important financial institution that assists in the initial sales of securities in the
primary market.

Bonds- forms of IOU issued by the government and companies when they want to borrow money from
the investors.

Expected Return- is the uncertain future return that a firm expects to get from its project. It is the return
that an investor expects to earn on an assets given its price growth potential and etc.

Shares- unit of equity ownership interest in an corporation that exists as a financial assets providing for
an equal distribution in any residual profits also known as equities.

Commodities- it includes oil and gas, precious metal such as gold and silver, industrial metal and soft
agricultural such as wheat, rice and soya.

Property- it is a bit odd cash is considered to be an asset class as the whole reason for investing in the
first place is to grow your money faster than if it was left in the bank or building society.

Marketplace – is a physical location of buyer and seller interaction and seller and buyer must meet each
other individually and share information/ a specific type of platform business model that focuses on
facilitating exchanges between buyers and sellers.

Investment Funds- it is a pooled money of many investors and invests according to a specific strategy.

Annuities- It is a contract between you and an insurance company in which the company promises to
make periodic payments to you, starting immediately or at some future time.

3 Main reason of Time Value of money is Inflation, Risk and Liquidity

Compounding Period- it is a span of time between when interest was last compounded and when it will
be compounded again.

Future Value- it is the amount of money which will grow over a period of time with simple or
compounded interest in.

Over the Counter refers to the process of how securities are traded for companies that are not listed on
a formal exchange such as the New York Stock Exchange.
The Financial Industry regulatory authority regulates brokers dealers that operate in the over the
counter market.

Growth stocks are the shares you buy for a capital growth rather than dividends

Dividends also known as yield stocks is the distribution of some of companies earnings to a class of its
shareholders, as determined by the company board of directors.

Base on stock analysis there would be no underpriced or overpriced in an efficient stock market.

Preferred stocks and Common Stocks represents an ownership share in a corporation.

Stock Market refers to several changes in which shares of publicly held companies are bought and sold.

Capital Markets are financial markets that bring buyers and sellers together to trade stocks, bonds,
currencies and other financial assets.

6 types of stocks (Blue Chip, Income Stocks, Growth Stocks, Defensive Stocks, Cyclical Stocks, Penny
Stocks)

Types of Dividend in the stock market investment (Cash dividend, Stock Dividend, Property Dividend,
Scrip Dividend, Liquidity Dividend)

Levels of investment Risk- Low Risk, Medium Risk, High Risk)

Types of Internal Risk factors in Risk Management (Human Factors, Technological Factors, Physical
Factors)

Worlds Top Online Marketplace (Amazon, Pay Pay Mall, eBay, Mercado Libre,)

Red It is the color of the candle stick which indicates that the price of a specific stock closed
lower than when it opened.
Green candle stick means that the stock’s price went up for that period.
Technical Analysis It is the study of the historical price and volume behavior to arrive at a
better investment decisions.
Fundamental Analysis It is the study or analysis of the company’s business model, products,
management, and financial status among others.
True TVM as one of the core principle of finance holds that provided money can earn interest.
False The more a stock’s returns vary from the stock’s average return, the less volatile the
stock.
In finance, the benefit of an investment is called a return.
True there is no guarantee that you will get a higher return by accepting more risk.
The return may be thought of as the growth in the value of an investment.