SPEACIAL TOPIC: IDENTIFICATION

1. ________ values are determined by the market price or interest rate of some other asset.
2. ________ is a contract wherein the buyer attains the right to trade the underlying asset over a
predetermined period.
3. ________ is a financial instrument whose value depends upon the value of another asset. The
main types of derivatives are futures, forwards, options, and swaps. An example of this is a
convertible bond.
4. ________ Is known as the price that both parties determine.
5. ________ the seller of the option.
6. ________ is a standardized legal agreement between the buyer and the seller of the underlying
asset.
7. ________ comes under the over-the-counter contracts (OTC). It enables parties to swap their
financial obligations or liabilities, among which interest rate swaps are the most common.
8. ________ are traded over the counter instead of through an exchange.
9. ________ The cash flows within this contract are based on a rate of interest, and while one cash
flow is generally fixed, the other is susceptible to change as per a benchmark interest rate.
10. ________ offer the contracting parties the option to customize the contract as per their
requirements.
11. ________ can reduce the volatility of cash flows, and this decreases the probability of
bankruptcy.
12. ________ Firms are reluctant to raise external equity due to high flotation costs and market
pressure. This means that the capital budget must generally be financed with debt plus
internally generated funds, mainly retained earnings and depreciation.
13. ________ is associated with having cash flows fall below expected levels. Risk management can
reduce the likelihood of low cash flow.
14. ________ Many investors cannot implement a homemade hedging program as efficiently as a
company. Firms generally have lower transaction costs due to a larger volume of hedging
activities.
15. ________ firms can sometimes reduce input costs, especially the interest rate on debt, through
the use of derivatives called “swaps.”
16. ________ Many compensation systems establish “floors” and “ceilings” on bonuses or else
reward managers for meeting targets.
17. ________ Companies with volatile earnings pay more taxes than more stable companies due to
the treatment of tax credits and the rules governing corporate loss carry-forwards and carry-
backs.
18. ________ is the portion of total risk that can be reduced through diversification.
19. ________ risk that cannot be reduced or diversified away
20. ________ a derivative contract through which two parties exchange the cash flows or liabilities
from two different financial institutions.
21. ________ defined as situations in which aggregate risk can be reduced by derivatives
transactions between two parties (called counterparties), exist for many commodities, foreign
currencies, interest rates on securities with different maturities, and even common stocks
where portfolio managers want to “hedge their bets.”
22. ________ The price that must be paid for a share of common stock when an option is exercised.
23. ________ A contract that gives its holder the right to buy (or sell) an asset at a predetermined
price with a specified period of time.
24. ________ An option to buy, or “call,” a share of stock at a certain price within a specified period.
25. ________ An option to sell a share of stock at a certain price within a specified period.
26. ________ is a form of insurance against adverse price movements of a currency.
27. ________ Guaranteed exchange rate at a future date.
28. ________ guarantees a maximum or minimum exchange rate
29. ________ exchange now in return for an agreed reversal at a specified future date on agreed
term.
30. ________ is an agreement between a corporation and a financial institution.
31. ________ use forward contracts to hedge their imports and to lock in the rate at which they can.
32. ________ is wider for less liquid currencies.
33. ________ foreign currency is more expensive than the current cost as given by spot rate.
34. ________ foreign currency is less expensive than the current cost as given by spot rate.
35. ________ is the practice of taking advantage of a price difference between two or more
markets.
36. ________ is influenced by the interest rate differential between the two countries and can
change over time.
37. ________ An MNC can offset a forward contract by negotiating with the original counter party
bank.
38. ________ can be used for emerging market currencies where no currency delivery takes place at
settlement; instead one party makes a payment to the other party to settle the difference
between future and spot rate.
39. ________ are contracts specifying a standard volume of a particular currency to be exchanged
on a specific settlement date.
40. ________ can execute orders for currency futures contracts by calling brokerage firms or use
electronic trading platforms.
41. ________ Differ from forward contracts because futures have standard contract specifications.
42. ________ is determined by arbitrage (riskless trading).
43. ________ The purchase of futures contracts locks in the price at which a firm can purchase a
currency.
44. ________ Sellers (buyers) of currency futures can close out their positions by buying (selling)
identical futures contracts prior to settlement.
45. ________ The sale of futures contracts locks in the price at which a firm can sell a currency.
46. ________ is a collection of institutions which allow the exchange of funds, such as banks,
insurance companies, and stock exchanges.
47. ________ is the set of implemented procedures that track the financial activities of the
company.
48. ________ exists in the corporate, national, and global level.
49. ________ is basically a broader regional system that encompasses all financial institutions,
borrowers, and lenders within the global economy.
50. ________ is the system that enables lenders and borrowers to exchange funds.
51. ________ is responsible in importation or foreign exchange.
52. ________ handle all the money of all agencies of our country.
53. ________ is the one who handle all the international currencies, gold and more that owned by
our country.
54. ________ are generally described as that group receiving income, majority of which typically
come from wages and salaries.
55. ________ is the mother of all banks;
56. ________ are businesses such as trading, manufacturing, extractive industries, construction and
genetic industries.
57. ________ channel the funds from lenders to borrowers.
58. ________ can also be the lender and borrowers just like financial institution.
59. ________ Is an institution that manages a state’s currency, money supply and interest rate.
60. ________ is the national, provincial, city and towns comprising the Philippines as a whole.
61. ________ refer to the participants from the rest of the world such as households, government,
financial and non-financial firms, and central bank.
62. ________ These banks continue to account for the bulk of the total resources of banking
industry.
63. ________ usually oversee the commercial banking system of their respective countries.
64. ________ They exchange goods and services across national boundaries. International trade and
international finance are parts of globalization.
65. ________ primarily engaged in mobilizing the small savings of the people. They provide funds
for agriculture and industry at reasonable interest rates.
66. ________ The primary function is to receive time deposit of different types and to invest its
funds in long term investment.
67. ________ these institutions may either be stock or non-stock corporations.
68. ________ fulfill the investment function by allowing small farmers to finance their needs
through the granting of loans for capital or other uses.
69. ________ It is a government entity, formerly the Rehabilitation Finance Corporations.
70. ________ started operating in 1935 as the National Loan and Investment Board.
71. ________ finance the acquisition and distribution of agricultural estates for division and resell
these small landholders.
72. ________ was created under Republic Act No. 6848 for the purpose of promoting and
accelerating the socio-economic growth of Mindanao.
73. ________ is defined to mean as “any enterprise” which engages in the underwriting of securities
of other corporations “.
74. ________ Pursuant to the provision of the Revised Securities Act, no broker, dealer, or salesman
must engage in business in the Philippines.
75. ________ n is a special type of savings institution. Because of its very nature, however, it falls
under this category in view of the fact that it also receives savings from members and lends fund
to them.
76. ________ is the act or process of guaranteeing the distribution and sale of securities of any kind
issued by another corporation.
77. ________ It also has for its purpose the inculcation of the habit of thrift, frugality, and the idea
of helping one another.
78. ________ contribute to the country’s socio- economic development as well as to the insured.
79. ________ is any corporation formed or organized for the purpose of acting as trustee or
administering any trust or holding property or on deposit for the use.
80. ________ is another type of savings’ institutions.
81. ________ provides credit to small borrowers who are not qualified to obtain small loans from
financial institution.
82. ________ is a corporation engaged in the business of accumulating the savings of its member.
83. ________ the cost of borrowing and terms of payment are generally fair.
84. ________ are primarily organized for the purpose of extending credit facilities to consumer and
to industrial, commercial, or agricultural enterprises.
85. ________ Fund managers, lending investor, and venture capital corporations are among these
institutions.
86. ________ the Government Service Insurance System (GSIS) started its operation.
87. ________ was created with the primary purpose to guarantee foreign loans granted to any
domestic entity enterprise or corporation, majority of the capital of which is owned by citizens
of the Philippines.
88. ________ the Social Security System (SSS) started its operation.
89. ________ As its capacity the funding and administrative experience grew, other benefits have
added to the program such as hospitalization benefits under the Medicare program, employees’
compensation benefits, and maternity benefits.
90. ________ primary purpose is to develop and provide a secondary market for home mortgages
granted by public and/ or private home financing institutions.
RISK MANAGEMENT: IDENTIFICATION

1. ________ is the probability that actual results will differ from expected results.
2. ________ defined as the volatility of returns.
3. ________ Asset-specific or company-specific uncertainty
4. ________ The impact of political decisions and changes in regulation
5. ________ The capital structure of a company (degree of financial leverage or debt
burden)
6. ________ The impact of changing interest rates.
7. ________ Uncertainties that are specific to a country.
8. ________The impact of changes in social norms, movements, and unrest.
9. ________Uncertainty about environmental liabilities or the impact of changes in the
environment.
10. ________The impact that the decisions of a management team have on a company.
11. ________Uncertainty about a company’s operations, including its supply chain and the
delivery of its products or services.
12. ________Uncertainty related to lawsuits or the freedom to operate.
13. ________The degree of competition in an industry and the impact choices of
competitors will have on a company.
14. ________A method of risk-adjusting an investment is the most common approach, as
it’s fairly simple to use and is widely accepted by academics.
15. ________is more challenging to perform but offers a more detailed and more insightful
analysis.
16. ________is a method of reducing unsystematic (specific) risk by investing in a number of
different assets.
17. ________g is the process of eliminating uncertainty by entering into an agreement with
a counter party.
18. ________The concept is that if one investment goes through a specific incident that
causes it to underperform, the other investments will balance it out.
19. ________commonly used by investors to reduce market risk, and by business managers
to manage costs or lock-in revenues.
20. ________There is a wide range of insurance products that can be used to protect
investors and operators from catastrophic events.
21. ________include reviewing, analyzing, and improving their safety practices;
22. ________Companies can lower the uncertainty of expected future financial
performance by reducing the amount of debt they have.
23. ________refers to the risk inherent to the entire market or market segment.
24. ________refers to risks that are not shared with a wider market or industry. Often
specific to an individual company, due to their management, financial obligations, or
location.
25. ________is the overall, day-to-day, ongoing risk that can be caused by a combination of
factors, including the economy, interest rates, geopolitical issues, corporate health, and
other factors.
26. ________includes internal factors that risks the revenue and performance of the
company. This includes not obtaining proper copyright for a new brand or a patent for a
new product.
27. ________means risk related to company’s capital structure. The capital structure of all
the companies usually has a mix of debt and equity.
28. ________arises due to negligence or unforeseen events, such as supply chain problems,
breakdown of machinery, data breaches etc. Includes risk from day to day operations
and companies take up preventive measures regularly to avoid equipment related
issues.
29. ________The risk involves management’s failure to take right decision regarding its
product or services.
30. ________relate to changes in laws or regulations that go against the company or
industry.
31. ________is the litigation risk which the company faces due to legal action.
32. ________is the probability of a decline in the value of an asset resulting from
unexpected fluctuations in interest rates. Is mostly associated with fixed income assets
(e.g., bonds) rather than with equity investments.
33. ________is the possibility of losing money on an investment or business venture.
34. ________refers to the economic, social, and political conditions and events in a foreign
country that may adversely affect a financial institution's operations.
35. ________is a manifestation of what goes on around us and is driven by influences inside
every one of us— beliefs, emotions, mental health, fears and anxieties.
36. ________include fluctuations in currency exchange rates, economic or political
instability, the potential for trade sanctions or embargo.
37. ________This risk can be defined as the exposure to adverse consequences stemming
from population-based activities and negative public perception.
38. ________is the probability and consequence of an unwanted accident.
39. ________is the risk of loss as a result of ineffective or failed internal processes, people,
systems, or external events which can disrupt the flow of business operations.
40. ________Operational risk caused by people can arise due to employee deficiencies or
employee shortages.
41. ________Every company has its own processes. All companies have steps that must be
performed in sequential order or else detrimental outcomes are possible.
42. ________employees conspiring and often colluding to overtake internal controls and
misappropriate company resources.
43. ________deficiencies in computer systems, hardware, software, or the interaction
between any of their components.
44. ________ independent parties outside of the company attempting to bribe, thieve,
forge, or cyber-attack.
45. ________management's inability to properly assess a situation and deploy the right
strategy or failure to execute a correct strategy.
46. ________violation or risk of violation of workplace safety measures, whether physical,
mental, or other.
47. ________inclement weather, fire, or harsh winter conditions that can put physical
assets at risk and make it impossible for employees to perform their daily tasks.
48. ________operational activities that harm customers, mislead information, incite
negligence, or accidently not be in compliance of requirements.
49. ________is the risk—financial, ethical, or otherwise—associated with ineffective,
destructive, or underperforming management. Management risk can be a factor for
investors holding stock in a company.
50. ________This type of financial risk arises out of legal constraints such as lawsuits.
Whenever a company needs to face financial losses out of legal proceedings, it is a legal
risk.
51. ________occur from negligence or a deliberate failure to comply with client obligations.
52. ________occurs when an individual, company, or entity’s action or inaction causes
damage.
53. ________Firms need to comply with federal laws and regulations. Compliance violations
immediately result in lawsuits and penalties.
54. ________primarily relates to two situations—damage caused by either party not
fulfilling contract terms or damage caused by poor performance.
55. ________is a tricky aspect; even after getting acquitted, they might not recover their
brand image.
56. ________are a big hassle; involved parties lose business and reputation.
57. ________ are also referred to as policy risks.
58. ________ The exposure may be tolerable without any further action being taken.
59. ________ Some risks will only be treatable, or containable to acceptable levels, by
terminating the activity.
60. ________ the ability to do anything about some risks may be limited, or the cost of
taking any action may be disproportionate to the potential benefit gained.
61. ________ The purpose of treatment is that, whilst continuing within the organization
with the activity giving rise to the risk, action (control) is taken to constrain the risk to an
acceptable level.
62. ________ This might be done by conventional insurance or it might be done by paying a
third party to take the risk in another way.
63. ________ It should be noted that the option of termination of activities may be severely
limited in government when compared to the private sector.
64. ________ This option is particularly good for mitigating financial risks or risks to assets.
65. ________ refers to the amount and type of risk that an organization is willing to pursue
or retain.
66. ________ can be influenced by legal or regulatory (compliance) requirements.
67. ________ the level of risk exposure (likelihood) associated with a particular hazard is
high but the potential loss (impact) associated with it is low, the organization will wish
to treat the risk.
68. ________ the likelihood of a risk materializing is low but the potential is high.
69. ________ is closely related to the desire to eliminate or terminate the risk.
70. ________ may therefore be considered to be a risk transfer option, as well as a risk
treatment option.
71. ________ can be achieved by conventional insurance and also by contractual
agreement.
72. ________ a risk is both of high likelihood and high potential impact.
73. ________ is one of the main risk responses available in relation to hazard risks.
74. ________ can require the insurance company to pay for losses suffered directly by the
insured.
75. ________ This transfer normally takes place by way of insurance and it is often
described as risk financing.
76. ________ includes property damage insurance.
77. ________ are contracts of utmost good faith. This means that the insured party is
required to disclose all information relevant to the insurance contract.
78. ________ is a risk transfer or risk sharing response.
79. ________ compensation to employees injured at work.
80. ________ compensation following motor accident.
81. ________ compensation to public or customers.
82. ________ compensation for damage or injury.
83. ________ compensation to client for negligent advice.
84. ________ loss of profit and increased cost of working.
85. ________ damage to premises by adverse events.
86. ________ – losses, such as loss of cash, goods in transit, credit risk and fidelity
guarantee (staff dishonesty).
87. ________ compensation for damage caused by terrorism
88. ________ repair of own vehicles.
89. ________ compensation on loss of key staff member.
90. ________ benefits to employees that can include: life cover, critical illness cover,
income protection, private medical costs, permanent health cover, personal accident
and travel injury/losses.
91. ________ legal and compensation costs.
92. ________ is defined by the insurance premium that is required from the organization.
93. ________ usually have limitations, warranties and exclusions. These will state that
claims will be refused in certain circumstances.
94. ________ is an insurance company owned by an organization that is not otherwise
involved in insurance.
95. ________ The organization that owns a captive insurance company.