Arellano University

Senior High School Department

Date:
Learning Plan in: Business Finance

I. TOPIC: Financial Market in the Financial System

Core Values: Conceptual Thinking

II. OBJECTIVES
A. Describe the role of financial market and other sectors of the financial system
B. Discuss the classification of financial market

III. REFERENCES: Mejorada, Nenita D. (2006) Business Finance, Goodwill Trading Co. Inc. pp 10-11
Cayanan, A. & Borja, Business Finance, Quezon City, Rex Bookstore, pp 9-13

IV. TEACHING PROCEDURE/ STRATEGIES

A. Daily Routine (Checking of attendance)
B. Simple Recall (Preview)
C. Motivation – Present a situation of shortage and surplus
D. Development of the Lesson

a. ACTIVITY
Concept Note #4 FINANCIAL MARKET in the FINANCIAL SYSTEM
Financial System - is a set of institutions that exist on firm, regional and global levels which permits the
exchange of funds. It is normally composed of the ff;
Sectors/ Factors involved  Users of Funds * Suppliers of Funds * Financial Market
in the Financial System  Financial institution * Financial instrument * Private placement
FINANCIAL MARKET- organized forums in which the suppliers and users of various types of funds can make
transactions directly, a place where the selling-buying activity occurs to trade equity securities.
Classification of Financial Markets
As to term or Maturity As to type of Issue
1. Money Market- cover markets for short-term 1. Primary Market- consists of issuance of new
debt instruments (debt securities) security
2. Capital Market – are markets for long-term 2. Secondary market – are markets for currently
securities, (> 1 year). (Debt and Equity Securities) outstanding securities.

Questions:
1. What is the main factor of the difference between money market and capital market?
2. Differentiate the two from each other.

b. ANALYSIS
Let the student answer the question.
The factor is the length of time provided. Money market- short term, Capital market- long term.

c. ABSTRACTION
In the discussion of the financial market, we should briefly discuss first the financial system and the
sectors involved in it. The financial market only works when there is a user of fund and a supplier or source
of fund. If a user of fund, Mr. A needs some fund and he knows a friend, Mr. B who has excess fund to lend,
they could agree with a private placement. However, if they are unknown to each other, then may opt to
proceed to the financial market where they can make transactions directly and according to their agreed
terms. The instrument they used for the transfer of funds is what we call the financial instrument.
Financial instrument may be an asset in the form of cash or receivables. It may be a financial liability such as
bonds, notes payable or it may be an equity instrument such as stocks. Financial market is differentiated
 with financial institution in the financial system. According to its classification according to maturity, we
have money market for short and capital market for long term. If according to type of issuance, we have
primary market which includes a new issuance and secondary market which involves a second-hand issues.

d. APPLICATION/ASSESSMENT
“Matching Type”

Concept Drill# __ Match the classification of financial market in Column B to the corresponding description
in Column A. Write your answers on the space provided before each number

Column A Column B

1. ___ Issuance of new securities thru public offering a. Money market

2. ___ Includes long term debt securities b. Capital Market

3. ___ Includes short term debt c. Secondary market

4. ___ Sale of securities to others d. Primary Market

V. ASSIGNMENT
1. Give one example of financial instrument under financial asset and financial liability

2. Research about the financial institutions.

 Arellano University
Senior High School Department

Date:
Learning Plan in: Business Finance

I. TOPIC: Financial Institution in the Financial System

Core Values: Critical Thinking

II. OBJECTIVES
A. Describe the role of financial institution in the financial system
B. Distinguish a financial institution from a financial market

III. REFERENCES: Mejorada, Nenita D. (2006) Business Finance, Goodwill Trading Co. Inc. pp 12-15
Cayanan, A. & Borja, Business Finance, Quezon City, Rex Bookstore, pp 14-18

IV. TEACHING PROCEDURE/ STRATEGIES

A. Daily Routine (Checking of attendance)
B. Simple Recall (Preview)
C. Motivation – Presentation of situation
D. Development of the Lesson

a. ACTIVITY
Concept Note #5 FINANCIAL INSTITUTION in the FINANCIAL SYSTEM
FINANCIAL INSTITUTIONS – are the firms that bridge the gap between the surplus units or
investors/lenders and the deficit units or borrowers which issue own financial instruments.
DEPOSITORY INSTITUTIONS NON-DEPOSITORY INSTITUTIONS
-institutions that accepts deposits from surplus units and -obtain funds by issuing contracts
issues accounts/deposits that are not deposits.
1. Commercial Banks 1. Insurance Companies
- ordinary commercial banks -Life Insurance
-expanded commercial/universal banks -Property Insurance
2. Thrift Banks 2. Fund Managers
-savings and mortgage banks 3. Investment Banks
-private dev’t banks -microfinance thrift banks 4. Finance Companies
- credit unions 5. Pawnshops
3. Rural Banks (community) 6. Lending Investors

Questions:
1. Differentiate depository institutions from non-depository institutions.
2. Describe a commercial bank and a rural bank.

b. ANALYSIS
Ask students for their answers.
The two classifications of financial institutions differs on how they obtain the fund/financial resources. The
different types of banks vary from how they usually operate.

c. ABSTRACTION
Financial Institution is a part of the financial system. This sector is most common to us since this involves
institutions that act as intermediaries between the one who needs the fund (user/borrower) and the one
who has the excess of fund (supplier) but do not know where to go to address their needs. Here the user
and supplier does not know each other’s existence so they can go after an intermediary institution. The
basic example for this is the bank. If people has excess fund and too afraid to invest in other companies,
 they deposit this to the bank which in return used by the bank to lend those people who apply for their
bank loan.
Thus, to differentiate a financial market from financial institution, it may go like this, Financial Market is
a place where the user of fund/ borrower and the supplier of fund/ DIRECTLY interact or make transactions
to come up with agreed private placement while financial institutions act as intermediaries between the
borrower and the user where the supplier does not know where his/ her fund goes and the borrower had
no idea where it came

d. APPLICATION/ASSESSMENT
“IDENTIFICATION”

Identify whether the following given is a depository institution or a non-depository institution.

1. Rural banks 5. Pru Life Insurance

2. BDO 6. Thrift bank
3. Palawan Pawnshop 7. MetroBank commercial bank
4. Sun Life Insurance 8. Fund manager

V. ASSIGNMENT

Choose one financial institution and briefly discuss.