Colegio De Santa Monica Inc.

Polangui, Albay
Academic Year 2021-2022

BUSINESS FINANCE (SHS-GRADE 12) Page 1

The module is divided into two lessons, namely:
• Lesson 1 – explain the major role of financial
management and the different
individuals involved
• Lesson 2 – distinguish a financial institution from
financial instrument and
financial market

After going through this module, you are expected to:

• Lesson 1
1. determine the key positions in a corporate organization;
2. differentiate the roles of every key positions in a corporate
organization;
and
3. identify the primary activities of the financial manager.
• Lesson 2
1. define financial markets, financial institutions, and
financial
instruments;
2. identify the types of Financial Markets, Financial
Institutions and
Financial Instruments; and
3. differentiate a financial institution from financial
instrument and
financial market.

BUSINESS FINANCE (SHS-GRADE 12) Page 2

Directions: Write the letter of your answer on a separate
sheet of paper.
1. Which of the following requires funds from external
sources?
a. Financial markets c. financial institutions
b. Private placement d. all of the above

2. Which of the following is the primary goal of financial

manager?
a. Minimizing risk c. maximizing wealth
b. Maximizing risk profit d. minimizing return

3. Wealth maximization as the goal of the firm implies

enhancing the wealth of
____________________.
a. The Board of Director c. The federal government
b. The firm’s employee d. the firm’s stockholders

4. Which of the following the Financial Managers should

consider when evaluating decision alternatives or potential
actions?
a. only risk
b. only return
c. both risk and return
d. risk, return, and the impact on share price

5. It receives premium payments that are placed in loans or

investments to accumulate funds to cover future benefits.
a. life insurance company c. saving bank
b. commercial bank d. credit bank
6. Which of the following is not a financial institution?
a. a pension fund c. a commercial bank
b. a newspaper publisher d. an insurance company

BUSINESS FINANCE (SHS-GRADE 12) Page 3

7. Which of the following most businesses sell securities in
order to raise money?
a. a direct placement c. a public offering
b. a stock exchange d. a private placement

8. Which of the following is not a service provided by financial

institutions?
a. Buying the business of customer
b. Investing customers saving in stock and

The Role of Financial Management in the different

individuals involved.

Financial Management is the handling of all financial

matters, including analysis of financial statements, the
evaluation of prospects before investment is actually started
and the raising of capital or funds from various sources. For
every growing economy the position of financial institution is
always important. This begins with the flow of money to the
person who has deposited in the bank. It is beginning with the
flow of money with the individual who deposit in the bank. If
you open up bank account, your money earns an interest. The
main role of the financial institution is to act as financial
intercessor means to be in the middle, to be the go between or
link between the depositors who have the money and the
borrower who need the money.

BUSINESS FINANCE (SHS-GRADE 12) Page 4

Key Individual Roles
➢ Depositor- (has the funds) is the person who has the money
and deposits it in a savings account
➢ Borrower - (who needs the funds) is the one who needs the
funds and borrow the funds through a bank. He needs the
fund to start a business project or venture.

Key positions in a Corporate Organization

➢ Stockholders- it is a group that holds one or more shares.

➢ Board of Directors- is an elected group of individuals that
represent stakeholder or the highest policy- making body in a
corporation.
➢ President- is a leader of a company’s executive group
➢ VP – second command in rank

BUSINESS FINANCE (SHS-GRADE 12) Page 5

VP for Marketing-performing market and competition
analysis
VP for Finance- raising or providing funds
VP for Operation- formulating daily policies
VP for administration- responsible for management
VP for internal affairs- to assume the duties and
responsibilities of the
President in the President’s absence
VP for external affairs-responsible for programs
communications
➢ Managers- exercises managerial functions or manage the
company
➢ Employees- a person employed

Role of Financial Manager

In the company the financial managers are accountable to an

agency in the company. Financial manager is mainly
responsible for determining capital structure, investment
funds, financial control, financial needs and planning.

BUSINESS FINANCE (SHS-GRADE 12) Page 6

 What’s More?

Activity 1: Like to watch the best

Directions: Watch a video clip about primary role of financial
manager. Jot down the primary role of financial manager from
a video you’ve watched and answer the following question.

Video Link: https://youtu.be/pOQUQHZCKIs

1. What is the primary role of financial manager?

2. What is the best part of being a financial manager?
3. How do financial manager affect the firm’s overall strategy?

Rubrics for Activity 1: Like to watch the best

Indicators Max Scoring

Score Details
Completeness: Learners 5
responses directly
answer each part of
questions(s)
Content: Learners 5 5-
response clearly show Excellent;
and understand the 4 - Very
lesson content Good;
Analysis: Learners 5 3 - Good;
response provides 2 - Fair;
analysis to the larger 1- Needs
concepts of the lesson. Improvement
Writing skills: Learners 5
write clearly, in
complete sentences,
with minimal errors in
grammar and spelling

BUSINESS FINANCE (SHS-GRADE 12) Page 7

 What I Have Learned
At this point, let us see how much you have gained from the
discussions and activities you have undergone.

Activity 2: Exit slip!

Directions: complete the sentence on the Exit Slip (Fisher and

Frey, 2004).

1. Write one you learned today………

2. I didn’t understand in…..
3. I enjoyed doing in…..
4. I would like to learn more about ….
5. Please explain more about ….
6. The thing that surprised me the most today was…..

Activity 3: Trace Its Benefits

Directions: How would you relate the role of financial

managers, role of financial market and role of investors?

Role of Role of
Financial Investors
Manager
___________
___________
___________
___________
___________
__________
___________

BUSINESS FINANCE (SHS-GRADE 12) Page 8

 In the previous lesson, you have learned about the
meaning of financial management and the major role of the
financial management and the different individuals involved
financial management and financial managers play a crucial
role in making financial decisions and exercising control over
finances in the organization

What is New?

Below activity will help you check how much you know about
the phrases of economic development and its impact to
business environment.

Activity 4: JUMBO/PUZZLE WORD -SEARCH-

IDENTIFY
Directions:

1. Look and Circle the PUZZLE words correctly.

2. SEARCH its meaning from the different sources such
as dictionary or books
3. IDENTIFY each word if it is FINANCIAL MARKET,
INSTRUMENT Or INSTITUTION.

CAPITAL CREDIT UNIONS

BANK DEPOSIT CASH
STOCKS BONDS
REAL STATE BOND MARKET
INSURANCE CENTRAL BANK

BUSINESS FINANCE (SHS-GRADE 12) Page 9

 What is It?

Financial Market
Financial Market - Organized for vendors and
consumers with various types of
funds may make transactions.

Example: Stock Market-regular activities of buying and selling

Bond Market- issue new debt.

Financial institution includes banks and non- banks. These

are the commercial banks, universal banks, investment
banks, investment companies, finance companies, life and

BUSINESS FINANCE (SHS-GRADE 12) Page 10

nonlife insurance companies, mutual fund companies, and
private equity firms.

➢ Commercial Banks are in particular deposit taking

monetary institutions that extend credit source to the retail
and purchaser market. They address minimum quantity of
employee, single area or small amount volume, generally now
not franchised. Also lend the money of savers/depositors to
small and medium enterprises that will pay them an interest
regularly in exchange for the use of their funds.

➢ Universal Banks lend to multinational companies or

companies with global presence and their clientele are mostly
the larger corporations.
Example: Allied Bank, China Bank

➢ Investment Banks are known to efficiently raise price

range for massive agencies and governments. There are two
functions of Investment banks. First is primary function that
accepts deposit, making advances,
and credit creation. Second is secondary function that
purchase of bonds/shares and to give or accept money.
Example: HSBC.

➢ Mutual Funds- owned by investment businesses which

allow small buyers to enjoy the benefits of making an
investment in a different portfolio of securities bought on their
behalf through professional funding manages. When mutual
finances use cash from buyers to put money into newly issued
debt or fairness securities, they finance new investment via
firms.

➢ Pension Funds – financial institution or establishments

that receive payments from workers and invest the yield in
their behalf.

BUSINESS FINANCE (SHS-GRADE 12) Page 11

Financial Instruments are the tools that help business daily
operations, and eventually make it grow.

When a financial instrument is issued, it gives rise to a

financial asset on one hand and a financial liability or equity
instrument on the other.

Example of financial asset is cash.

Financial Liability is any liability that is a contractual

obligation. An Equity Instrument is any contract that
evidences a residual interest in the assets of an entity after
deducting all liabilities.

Example: Ordinary Share Capital

These are the common examples of Debt and Equity

Instruments.
➢ Debt Instrument generally has fixed returns to fixed
interest rates.
Examples: Treasury Bonds usually low interest and have very
low risk and Corporate Bonds usually have higher interest
rates.

➢ Equity Instruments generally have varied returns based

on the performance of the issuing company. Returns from
equity instruments come from either dividend or stock price
appreciation. There are two type
of equity instrument: Preferred Stocks and common Stock

➢ Preferred Stock-if companies were to be liquidated and its

assets have to be distributed, no asset will be distributed to
common stockholders have been given.

BUSINESS FINANCE (SHS-GRADE 12) Page 12

➢ Common Stock is the real owners of the company.

Financial Institutions generally provide the Financial

Instruments that you can trade in Financial Markets

What I Have Learned

At this point, let us see how much you have gained from the
lesson and activities you have undergone.

Activity 5: True/False
Directions: Determine whether the below statements are true
of false. Write your answer on a separate sheet of paper.

________1. The primary role of financial institution is to act as

the link between the depositors who have the money and the
borrowers who need the money.
________2. Financial instruments are tools help finance
manager handle hiss cash, his short-term operating
requirements, and long-term business requirements.
________3. Financial markets are the platform where financial
instruments are offered, bought, and sold.
________4. Stocks are shares issued by government.
________5. Commercial banks are mainly deposit-taking
financial institutions that extend credit to the retail and
consumer market.
________6. Investment banks are known to successfully raise
funds for small corporations and governments.
________7. A financial institutions can be bank on non-bank,
________8. Long-term debts are also available to the borrower
for his business needs.
________9. An example of long-term debt is a bond.

BUSINESS FINANCE (SHS-GRADE 12) Page 13

_______10. Money market instruments are an inexpensive way
for government and financial institutions.

What I Can Do
Learned
Activity 6: CRITICAL THINKING

Directions: Read the scenario below and answer the

questions asked on a separate sheet of paper.

Financial institutions are intermediaries that play a vital role in nation

building. They source of funds for business to engage in projects that are
profitable maximize shareholder wealth, and build communities. Is there a
project you have in mind that is worthwhile, has potential to earn profits,
and will benefit your community in the long-term? List down those projects.
What financial institutions can help you achieve your dream of a
sustainable business for your shareholder or community?

Reference:

*toaz.info-senior-12-business-finance

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