1.

Describe what financial markets are

• Financial markets can be virtual platforms like electronic trading networks or

online marketplaces or physical locations like stock exchanges or

commodities markets. Trading and investing in a wide range of financial

items, such as derivatives, currencies, commodities, stocks, and bonds, take

place on financial markets, which are places or networks that bring dealers

and investors together. They are usually divided into primary and secondary

marketplaces. New securities are only ever issued on the primary market,

whilst previously issued securities are sold between investors on the

secondary market.

2. Distinguish between public financial markets and corporate financial market.

• Corporate and public financial markets have different participants, objectives,

and financial instrument categories. The public financial markets also have a

different set of participants these are the financial markets that are open to

the general public, or investors who are not customers of the firm, are those

where securities are exchanged. Anyone can participate by purchasing or

selling shares or other securities on these markets, which are governed by

governmental entities. Contrarily, corporate financial markets are places

where securities are exchanged between businesses or between a business

and its investors. Typically, these markets are unregulated by the government

and are private. In conclusion, corporate financial markets are primarily

private markets where securities are traded between businesses and

institutional investors, as opposed to public financial markets, which are

regulated markets where securities are sold among the general public.
3. Distinguish between primary market and secondary market.

• Within the financial system, there are two separate markets: the primary

market and the secondary market. Primary market are the newly issued

securities sometimes referred to as the new issue market usually these are

the securities offered through a private placement or an initial public offering

(IPO). Because it enables businesses and governments to raise money for

investments and other uses. In the other hand, the secondary market is the

previously issued securities are purchased and sold by investors in the

secondary market. Depending on their investing goals, investors can acquire

or sell assets on the secondary market by trading securities that they already

possess. Stock exchanges and over-the-counter marketplaces are examples of

the secondary market where securities may be continuously purchased andsold. In conclusion,
new securities are initially issued on the primary market,

while investors buy and sell previously issued assets is on the secondary

market.

4. What are the basic functions of the financial markets? Explain them briefly.

• The financial markets perform a number of vital tasks that are necessary for

the economy to run smoothly. One of this is raising cash for companies and

governments as is enabling investment by giving investors a means to

diversify their portfolios and receive returns, as well as price discovery by

figuring out the fair market value of assets. The ability for investors to rapidly

and easily purchase and sell assets, which is crucial for risk management, is

another benefit of the financial markets. Last but not least, financial markets

provide risk management for investors through the use of derivatives like

options and futures. Overall, the financial markets play a significant role in
facilitating growth and development as well as the efficient operation of the

economy.

5. What are the two principal sources of funds in the financial market? Explain

briefly.

• The two main types of funding in the financial market are debt and equity.

Equity is ownership in a corporation, whereas debt is borrowed money that

must be returned over time with interest. Bonds, loans, and other kinds of

credit are considered debt instruments, whereas stock purchases are

considered equity assets. Both debt and equity may be used to finance

businesses and governments, but they have different payback and return on

investment schedules. While equity has a higher potential return but higher

risk, debt has a set repayment schedule and lower risk. Depending on their

investment objectives and risk tolerance, individuals might choose to invest

in one or both forms of funding, while businesses and governments frequently

employ both.

6. Distinguish between the organized stock exchange and over-the-counter

exchange.

• The method of trading securities is the main distinction between an organized

stock exchange and an over-the-counter exchange. An organized stock

exchange is a regulated market with a central location that brings buyers and

sellers together to trade assets using a defined auction procedure. The New

York Stock Exchange and Nasdaq are two examples. While an over-the-

counter exchange is a decentralized market where assets are exchanged

directly between two parties. Smaller, less well-known firms or securities that
don't fit the requirements for trading on an official stock exchange are

frequently traded on OTC markets. In conclusion, OTC exchanges are

decentralized they do not employ standardized auction procedures and do

not have rigorous listing standards, whereas organized stock exchange havecentralized
locations, standardized auction processes, and tight listing

requirements.

7. What are the attributes of financial markets that investors as well as creditors

are looking for? Explain them briefly.

• In the financial markets, creditors and investors search for particular

characteristics that suggest the likelihood of a successful loan or investment.

First is the liquidity, which describes how easily an investor may buy or sell an

asset on the market. Highly liquid markets enable quick access to fair market

prices for investors, lowering risk and enabling effective capital allocation.

Next is Transparency, which refers to the amount of information available

about a firm or security, is another quality that creditors and investors look

for. Investors desire fast and accurate financial reporting, risk disclosure, and

other pertinent information that will allow them to make wise investment

choices. And also, financial market diversity is something creditors and

investors seek. This characteristic relates to the market's accessibility to a

large variety of investment opportunities. Investors can spread their risk over

a variety of assets through diversification, which also lowers their exposure to

certain businesses or industries. In conclusion financial markets that offer

liquidity, transparency, and diversity are what investors and creditors are

seeking for overall. These characteristics boost the possibility of lucrative

loans and investments while lowering risk.

markets for the last two to three decades?

• Major developments in the financial markets have been brought about by a

number of events during the past several decades. Technology is the main

factor for the reason that the financial sector has changed as a result of the

quick development of technology, which has made trading faster, more

effective, and more accessible on a worldwide scale in a way that the online

markets, electronic trading networks, and other technology advancements

have helped to lower transaction costs and boost liquidity. As a result, the

financial market has become more vibrant and linked. Deregulation is the

second force at work, many of the obstacles that once prevented investors

and institutions from transacting internationally or across asset classes have

been eliminated as a result of the financial markets' deregulation.

Globalization is the third force because the expansion of international

financial markets is a result of the growing interconnectivity of national

economies. Financial markets have grown increasingly interconnected as a

result of growing international commerce and investment, which has

enhanced cross-border capital flows and improved market efficiency. Lastly,

the financial industry has been significantly impacted by regulatory

developments because significant regulatory measures aimed at enhancing

the security and stability of financial markets were brought about by thefinancial crisis, stricter
capital requirements, more open financial reporting,

and more control over financial institutions were among these modifications.

These rules have aided in regaining public trust in the financial sector and

averting another catastrophe like the one that hit in in this financial crisis.
Overall, these factors have changed the financial sector by fostering more

competition, broadening investment options, and enhancing market

effectiveness. They have, however, also increased the financial system's

complexity and risk, emphasizing the necessity for ongoing supervision and

regulation.

9. What benefits could be achieved if the Code of Ethics governing Financial

Market Activities would be implemented and followed by the participants.

• A Code of Ethics in Financial Market Activities would boost trust and

confidence, risk management, transparency, reputation, and professionalism,

to name a few advantages of its implementation and observance. Participants

would be urged to behave ethically and less frequently engage in wrongdoing

by acting in the best interests of their customers and the market as a whole.

A more reliable and effective financial market that is beneficial to all players

would result from this.

10. What is a stock exchange? What is its main purpose?

• A stock exchange is a marketplace where buyers and sellers may trade stocks

and other assets. The trading of these assets will take place in a controlled,

regulated marketplace. The exchange aids in establishing fair market values

for these assets by providing a platform for connecting buyers and sellers of

securities. Companies may also use the market to issue additional shares to

investors in order to raise cash. Additionally, information on publicly traded

companies, such as financial reports and disclosures, is available to investors,

enabling them to make well-informed choices. Overall, the trading of

securities takes place in a transparent, effective, and regulated environment

11. What does "listing of securities” mean?

• The act of listing shares or other securities for trading on a stock exchange is

the exchange specifies conditions for a firm to be listed, including minimum

market capitalization requirements, financial reporting standards, and

corporate governance guidelines. Once the company satisfies these

conditions, its securities are listed on the exchange and can be traded by

buyers and sellers. In addition, companies may access a bigger pool of

possible investors, raise money, and improve their visibility and reputation in

the financial markets by listing their securities.12. What is the implication of the SEC granting a
"Self-Regulation Organization"

status to the Philippine Stock Exchange?

• The Philippine Stock Exchange (PSE) has been given "Self-Regulatory

Organization" (SRO) status, which enables it to control and enforce its own

rules and regulations while being overseen by the SEC. This classification gives

the PSE more freedom in doing its business, which can increase efficiency,

investor trust in the exchange's regulatory control, and eventually help the

Philippines' capital markets expand and thriv