You are on page 1of 60

INVESTMENT AND

THE FINANCIAL SYSTEM


BY: RABINO, CHRISTIAN G.

TEL
PLDT INC
PSEi
-101.44
-1.36 %
1,412.00
-26.00 -1.21 %
7,332.17
Philippines
investments
TOP ANSWERS
TEL
PLDT INC
1,412.00
-26.00-1.21 %
Bank
Investments
assets savings
bank securities
bond stocks
dividend
Financial Investment
Financial Intermediary
Financial Markets
Direct and Indirect
Finance
Financial
Investment
Involves the
purchase of
FINANCIAL
securities
INVESTMENT
(financial
instruments)
Earn income

AIM when value


rises in the
future
EARN
Future dividends
(payment-profit)

Sell at a higher
price
Claim on the
SECURITY or
issuer’s future
FINANCIAL
income or
INSTRUMENTS
assets
2 MAIN TYPES OF
INSTRUMENTS

1. BOND
2 MAIN TYPES OF
INSTRUMENTS

2. STOCKS
Principal
BOND
(debt contacts)
amount owed
+ Interest
[Revenue Bond]
Government Pojects

[Corporate Bond]
Ayala Corporation, Globe
Telecom, Filinvest Land, and
many more.
Shares of
STOCKS
(equity contracts)
ownership in a
corporation
Pays
proportional
shares of
STOCKS
(equity contracts) company
earnings
(dividends)
Supply of
capital
funds
investment
s
i
Provide a
means
of channeling
funds
Financial
Financial
Intermediari
In
es

Borrower
Lenders/ Financial s/
Savers Markets Spender
s
Financial
Financial
Intermediari
In
es

Borrower
Lenders/ Financial s/
Savers Markets Spender
s
Lenders/
Savers

[households]
[business firms]
Borrower
Financial
s/
Markets
Spenders
[Private
businesses]
[Government]
2 WAYS OF CHANNELING
FUNDS (SAVERS –
BORROWERS)

1. DIRECT
FINANCE
2 WAYS OF CHANNELING
FUNDS (SAVERS –
BORROWERS)

2. INDIRECT
FINANCE
Borrows
directly from
DIRECT
FINANCE
lenders in
financial
markets
Financial
Financial
Intermediari
In
es

Borrower
Lenders/ Financial s/
Savers Markets Spender
s
Plans to expand
Issue new stock
mining facility.
Channeling of
Savers funds
Spenders
Why it is important?
APX
APX
Involves go-
INDIREC between or
F I NT
ANCE financial
intermediaries
Financial
Financial
Intermediari
In
es

Borrower
Lenders/ Financial s/
Savers Markets Spender
s
Borrows from
savers and
Financial uses these
Intermediary funds to make
loans to
spenders
APX
3 CATEGORIES OF FINANCIAL
INTERMEDIARIES

1. DEPOSITORY
INSTITUTIONS
Financial In
interest
3 CATEGORIES OF FINANCIAL
INTERMEDIARIES

2.
CONTRACTUAL
SAVINGS
INSTITUTIONS
Financial In
3 CATEGORIES OF FINANCIAL
INTERMEDIARIES

3. INVESTMENT
INTERMEDIARIES
MUTUAL FUNDS,
MONEY MARKET FUNDS,
AND TRUST FUNDS
Philippine
financial
system is
dominated by
banks
Reduce
Transaction
cost-
(because of
their expertise)
so there is a
Smooth Flow of
funds
Dominate
Financial
financial flows
Intermediarie in most
s economies.
Financial
Financial
Intermediari
In
es

Borrower
Lenders/ Financial s/
Savers Markets Spender
s
PHYSICAL
INVESTMENTS
THANK YOU!
Be fearful when
others are
greedy, be
greedy when
others are
fearful.
Warren Buffet