Finances and the Financial system


Student’s Name: Judith González Cardona

Nua: 117532

After watching the video, answer the following questions in complete sentences.

  • What is Finance?

    • It refers to the branch that studies the exchanges and risks of capital between stakeholders.

  • What is the Financial System? 

    • It deals with financial transactions and money exchanges between savers, investors, leaders and borrowers.

  • What are the functions of a financial system?

    • Linking financial institutions and markets to provide financial services for stakeholders operating in the financial system like depositors, lenders, borrowers, government and others.

    • Providing a payment system.

    • Provides a mechanism to pull funds in housing and corporative investments.

    • Facilitates liquidity.

    • Provides avenues for managing risks.

    • Takes care of short and long term needs of market participants.

    • Reduces asymmetric information

    • Creates investment opportunities.

    • It helps efficient allocation of financial resources.

    • Significant role in economic growth.

  • How are the main types of financial institutions categorized? Describe each one.

    • Banking and non-banking

      • Banks are in charge of creating credits and non-banking institutions purvay said credit.

    • Intermediaries vs non-intermediaries.

      • Intermediaries litigate for savers and investors, lend money and mobilize savings.

      • Non-intermediaries also lend money but said capital is not directly obtained from the savers - it may come from multiple sources such as the other financial assistance.

  • Which are the main classes of financial instruments issued in a financial system? Describe them in detail.

    • Derivative instruments have values determined from underlying assets like resources.

    • Cash instruments are financial instruments with values that are directly influenced by market conditions.

    • Foreign exchanges are represented on the foreing market and are constructed by currency agreements. 

  • What are the distinctions between various types of financial markets according to their function? Explain them.

    • Money and Capital Markets

      • It's a conventional distinction based on the difference in the period of maturity that the financial assets issued in these markets.

    • Primary and Secondary Markets

      • Primary focuses on new financial claims or securities and Secondary markets deal with securities that are already in place or existing.

  • What does the “flow of funds” refer to? Explain in detail. 

    • It refers to the sum of the cash flows from and into different financial assets - these are usually calculated every month or quarterly.

  • Write a final reflection on the topic, mentioning what were the most important aspects you learned.

    • I really like economics and any explanation that may come with that field, that being said I had not yet seen anything about the financial system and I was really interested in learning about the functions that it has and how it affects the economy on a small and larger scale.

Comentarios

  1. Cinthia Segura Pérez21 de diciembre de 2021 a las 20:12

    I liked the approach you give to your answers because you summarize them clearly and concisely because, at least for me, it was a difficult topic to understand.

    ResponderEliminar
  2. Fernanda Ramos21 de diciembre de 2021 a las 20:25

    Excellent definitions of finance, and very good content, we share some ideas. I was glad to know what you think about this topic.

    ResponderEliminar
  3. Giselle Rivas Alcantar22 de diciembre de 2021 a las 12:11

    Like you, I like to learn new information about economics. As you say, it is important to take into account the financial system because we are susceptible to being affected by it. Another thing I want to mention is that I liked that your definition of flow of funds was short but consistent. We are asked to explain it in detail and you achieved it with just few words.

    ResponderEliminar

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