MONEY, FOREIGN EXCHANGE, FINANCE.

 

Alberto Robles Olvera                    Nua:786486
 

1.What is Finance?

Finance is a branch of administration and economics that exchange of capital between individuals, companies, or States and with the uncertainty and risk that these activities entail.

 

1.    What is Financial System?

It is the system in which the different financial entities intervene, and the markets participate.

 

2.    What are the functions of a financial system?

It serves to mediate between those who have excess money and want to lend it, and those who need financing. In other words, what the financial system generates are credits. A very important actor within the financial system are the banks, which act as intermediaries between those who have excess money and those who need it. In addition, they facilitate the conditions for both parties.

 

3.    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.

 

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

Cash Instruments: These are derivations of an underlying, for example stocks, based on future predictions.

Derivative Instruments: They are financial instruments with a value directly influenced by the condition of the markets.

Foreign Exchange Instruments: These financial instruments are represented in foreign markets and consist mainly of currency contracts and derivatives.

 

5.    What are the distinctions between various types of financial markets according to theirfunction? 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.

 

 

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

It is a measure of money that enters and leaves an economy, divide your money into 3 sections: operations, investments, and financing. In all of them you will find the exit and entry of cash.

 

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

Being able to listen to this speaker as a university student makes me reaffirm the idea that no matter what role you are in, knowledge is never enough and in this aspect, knowing that the economy is a giant mechanism that works from the largest to the smallest , and although sometimes it seems very complex or not very useful to understand it, it is important to know how the economy is managed in the world in order to achieve healthy finances in our realities as well, and this not only means living without debt, it is the opportunity to increase your wealth, make investments, improve your savings and generate a greater and better economy at home. Hence the importance of knowledge of currencies and international finances, as it allows us to understand events of an international nature that could affect our country, our companies and homes.