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Business Finance – Grade 12
Alternative Delivery Mode
Quarter 1 – Module 1: Introduction to Financial Management
First Edition, 2020
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Every effort has been exerted to locate and seek permission to use these materials from their
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Introductory Message
For the facilitator:
Welcome to the Business Finance – Grade 12 Modular Distance Learning (MDL) Self-
Learning Module on the Introduction to Financial Management!
This module was collaboratively designed, developed and reviewed by educators from
public institution to assist you, the teacher or facilitator in helping the learners meet
the standards set by the K to 12 Curriculum Most Essential Learning Competencies
(MELCs) in the “New Normal” situation while overcoming their personal, social, and
economic constraints in schooling.
This learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help
learners acquire the needed 21st century skills while taking into consideration their
needs and circumstances.
In addition to the material in the main text, you will also see this box in the body of
the module:
As a facilitator, you are expected to orient the learners on how to use this module.
You also need to keep track of the learners' progress while allowing them to manage
their own learning. Furthermore, you are expected to encourage and assist the
learners as they do the tasks included in the module.
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For the learner:
Welcome to the Business Finance – Grade 12 Modular Distance Learning (MDL) Self-
Learning Module on the Introduction to Financial Management!
This module was designed to provide you with fun and meaningful opportunities for
guided and independent learning at your own pace and time. You will be enabled to
process the contents of the learning resource while being an active learner.
What I Need to Know This will give you an idea of the skills or
competencies you are expected to learn in the
module.
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Additional Activities In this portion, another activity will be given
to you to enrich your knowledge or skill of the
lesson learned.
1. Use the module with care. Do not put unnecessary mark/s on any part of the
module. Use a separate sheet of paper in answering the exercises.
2. Don’t forget to answer What I Know before moving on to the other activities
included in the module.
3. Read the instruction carefully before doing each task.
4. Observe honesty and integrity in doing the tasks and checking your answers.
5. Finish the task at hand before proceeding to the next.
6. Return this module to your teacher/facilitator once you are through with it.
If you encounter any difficulty in answering the tasks in this module, do not
hesitate to consult your teacher or facilitator. Always bear in mind that you are
not alone.
We hope that through this material, you will experience meaningful learning and
gain deep understanding of the relevant competencies. You can do it!
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What I Need to Know
This module was designed and written with you in mind. It is here to help you master
the roles of Financial Management and familiarize financial institutions, financial
instrument, and financial market. The scope of this module permits it to be used in
many different learning situations. The language used recognizes the diverse
vocabulary level of students. The lessons are arranged to follow the standard
sequence of the course. But the order in which you read them can be changed to
correspond with the textbook you are now using.
• 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.
1
What I Know
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
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
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9. By definition, the money market involves buying and selling of what?
a. Funds that mature in more than one year
b. Flows of funds
c. Stocks and bonds
d. Short-term funds
11. Long-term debt instruments used by both government and business are known
as what?
a. bonds c. stocks
b. equities d. bills
12. It pertains to the money a retired private or government employees receive after
retirement.
a. life insurance company c. savings bank
b. pension funds d. credit bank
13. Which of the following is the type of financial intermediary that pools savings of
individuals and makes them available to business and government users?
a. Mutual fund c. savings bank
b. Savings and loans d. credit union
14. Which of the following major securities is traded in the capital markets?
a. stocks and bonds
b. bonds and commercial paper
c. commercial paper and treasury bills
d. treasury bills and certificates of deposit
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Explain the major role of
Lesson
financial management and
1 the different individuals
involved
What’s In
In the previous lesson, you have learned the meaning and main goal of finance.
Finance is defined of how individuals or business projects, and raise capital to fund
them. Also with the questions of how and why an individual or company acquires
the money needed.
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What’s New
Below activity will help you check how much you know about the major role of
financial management and the different individuals involved and the difference of
financial institution from financial instrument and financial market
4. Which of the following characterizes the role of VP for Sales and Marketing?
a. Ensuring production meets customer demands.
b. Identifying adequate and competitively priced raw material suppliers
c. Providing assistance in payroll preparation
d. Performing market and competitor analysis
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6. It provides opportunities for big and small investors to invest in financial
instruments which they would not have considered or may have considered but
do not have the time or expertise to do it.
a. Sun Life Prosperity Philippine Stock Index Fund
b. Insular Life
c. Philippine Stock Exchange
d. COL Financial
7. Which of the following is the person who has the money and deposits it in a
savings account?
a. Borrower c. Banker
b. Depositor d. Millionaire
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What is It
In Activity 1, you were able to give some of the key terms relative to the role of
financial management in the different individuals involved and comparison of
financial markets, financial institution and financial instruments. In this part of the
module, you will find out further about the expected role of financial management in
an organization in order to help improving the profitability of an organization.
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.
1 2 Business
Depositor Borrower Project
4 3
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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
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
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What’s More
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What I Have Learned
At this point, let us see how much you have gained from the discussions and
activities you have undergone.
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What I Can Do
This activity will help you transfer into real-life situations the knowledge and skills
you have learned from this module.
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Distinguish a financial
Lesson
institution from financial
2 instrument and financial
market
In many parts of the world, financial institutions play a major role in the social and
economic development programs of nations with developing or transitional
economies. Additionally, in some countries, the major financial markets and
economies would not have grown without the significant role that financial
institutions have play. It is therefore important to know the difference of financial
institution from financial instrument and financial market.
What’s In
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.
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What’s New
Below activity will help you check how much you know about the phases of economic
development and its impact to business environment.
R T U A P A R E C T C
E U D U E H P U E I R
C A P I T A L T N S E
B O I D C T A O T O D
O K L E A T E A R P I
N E V N S I S L A E T
D Y I L H K E E L D U
S O A L C E N D B K N
D I N O A U N D A N I
R A T O G O A L N A O
O S IR E T M O O K B N
B O N D M A R K E T S
E N U P W E R T Y I D
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What is It
Financial Market
Financial Market - Organized for vendors and consumers with various types of
funds may make transactions.
Financial institution includes banks and non- banks. These are the commercial
banks, universal banks, investment banks, investment companies, finance
companies, life and nonlife insurance companies, mutual fund companies, and
private equity firms.
Financial Instruments are the tools that help business daily operations, and
eventually make it grow.
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Example of financial asset is cash.
Financial Institutions generally provide the Financial Instruments that you ca trade
in Financial Markets.
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What’s More
1. FINANCIAL MARKET
2. FINANCIAL INSTITUTION
3. FINANCIAL INSTRUMENT
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What I Have Learned
At this point, let us see how much you have gained from the lesson and activities
you have undergone.
Activity 7: 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.
10. Money market instruments are an inexpensive way for government and
financial institutions.
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What I Can Do
This activity will help you transfer into real-life situations the knowledge and skills
you have gained or learned from this lesson.
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Assessment
Directions: Write the chosen letter on the space provided before the number.
2. 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
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 the type of financial intermediary that pools savings of
individuals and makes them available to business and government users?
a. Mutual fund c. savings bank
b. Savings and loans d. credit union
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9. By definition, the money market involves buying and selling of what?
a. Funds that mature in more than one year
b. Flows of funds
c. Stocks and bonds
d. Short-term funds
12. Long-term debt instruments used by both government and business are known
as what?
a. bonds c. stocks
b. equities d. bills
14. Which of the following should the Financial Managers 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
15. Which of the following major securities is traded in the capital markets?
a. stocks and bonds
b. bonds and commercial paper
c. commercial paper and treasury bills
d. treasury bills and certificates of deposit
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Additional Activities
Let us reinforce the skills/knowledge that you have gained from this lesson by doing
the next activity.
COMPONENTS
OF FINANCIAL
SYSTEM
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Assessment
1. A 9. D
2. B 10. B
3. D 11. A
4. A 12. A
5. B 13. B
6. D 14. C
7. C 15. D Activity 2 and 4 Students’ answers might
8. A vary. Refer to the Rubrics for the scoring.
9.
Activity 3
1.TRUE 3. TRUE 5.TRUE 7. TRUE 9. TRUE
2. TRUE 4. FALSE 6. FALSE 8. TRUE 10. TRUE
Activity 1 Activity 4
Role of Financial Managers
CAPITAL-Financial Market ➢ Financial managers make financing decisions that
CREDIT UNIONS- Financial require funding from investors in the financial
Market markets.
BANK DEPOSIT- Role of Investors
CASH- Financial Instrument ➢ Investors provide the funds that are to be used by
STOCKS- Financial financial managers to finance corporate growth.
Instrument
BONDS- Financial
Instrument Activity 1 What I Know
REAL STATE- 1. C
BOND MARKET-Financial 2. C 1. D
3. B 2. D
Market
4. D 3. B
INSURANCE- 5. A 4. C
CENTRAL BANK- Financial 6. A 5. A
Institution 7. B 6. B
8. B 7. C
9. B 8. A
Activity 2 10. B 9. D
10. B
Students’ answers might vary. 11. A
Scoring will be based on the 12. B
Rubrics 13. A
14. D
15. A
Answer Key
References
Yumang, K., Pao,TPC,Benito P. Business Finance: The Phoenix Publishing House,
Inc., 2016
Teacher Guide for Senior High School, Business Finance Published by the
Commission on Higher Education, 2016
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