5. Money, foreign exchange, finance

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5- MONEY, FOREIGN EXCHANGE, FINANCE. 

 

TASK 1

Student’s Name: Alondra Maricela Ramírez Aguilar.

Nua: 311517

 

1.     What is Finance?

The financial system deals with financial transactions and the exchange of money between savers, investors, lenders and borrowers.

 

2.     What is Financial System?

It is the set of institutions, whether governmental or financial institutions, media and markets that make it possible for the savings of economic agents to go into the hands of credit seekers.

 

3.     What are the functions of a financial system?

It provides payment system for the exchange of goods and services in the economy.

It provides the mechanism to pull the funds in terms of household savings for corporate investments.

It provides the financial capital for long-term capital formation for the government and business organizations.

It facilitates the investors and other market participants to liquidate their investment alternatives like stocks and bonds etc.

 

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

Banking and Non-Banking:

*banks provide transactions services

*create deposits or credit

*subject to legal reserve requirements

*can advance credit by creating claims against themselves

*other institutions can lend only out of resources put at their disposal by the savers

 

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

 

·        Money, refers to the current medium of exchange or means of payment.

·        Credit or loan is a sum of money to be returned normally with interest; it refers to a debt of economic unit.

·        Finance is monetary resources comprising debt and ownership funds of the state, company or person.

 

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

Money and capital Markets

This conventional distinction is based on the differences in the period of maturity of financial assets issued in these markets

While the money markets deal in the short-term claims (whit a period of maturity of one year or less), the capital markets does so in the long-term (maturity period above 1 year) claims

 

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

It is the amount of cash and credit, flowing in and out of a business.

 

 

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

 

The financial system has been and is very important since it allows to carry out the capture of economic resources of some people or organizations to make it available to other institutions or companies that require them for their investment. This is how, if there is a healthy financial system, the economic development of a country is promoted, since it allows the investment of capital towards productive activities, such as industry, technology, etc.

Comentarios

  1. Fernanda Ramos21 de diciembre de 2021 a las 8:24 p.m.

    Excellent definitions of finance, and very good content, we share some ideas. Good job

    ResponderBorrar
  2. Abril's Blog21 de diciembre de 2021 a las 10:44 p.m.

    I agree with you. For there to be good economic development, the financial system must be healthy and productive.

    ResponderBorrar
  3. David Aguilera Mújica22 de diciembre de 2021 a las 9:32 a.m.

    I agree with you regarding your answer in your conclusion, it is a difficult topic but it is very important to know about these topics

    ResponderBorrar
  4. My Business Communication Blog24 de diciembre de 2021 a las 12:47 a.m.

    I highly agree with your reflection. Sometimes we're not aware about the importance of finance in the world. I used to think about it as something boring that just bankers and politicians had to worry about. However, since I've read about its relevance in economic, commercial and social factors, I changed my point of view. Thank you so much for the information!

    ResponderBorrar

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