Polytechnic University of the Philippines - Manila

College of Accountancy and Financial Management

FIMA 202 – Financial Management
By: Allan Calderon DBA,AFBE,FLMI,PCS,CRS,PMPc,PSM,CWP,CEPP,CSSYB

Name: Jonh Carlo A. Manalansan

Section: BSBAFM 2-11S

Final Exam
Set 3

Part I. Multiple Choice (20%)

1. The amount of debt and/or equity employed by a firm to fund its operations.
a. Capital Structure c. Owner’s Investment
b. Debt Structure d. Sales of Fixed Assets

2. The amount of loss you’re willing to stomach if an investment goes south.

a. Risk Rating c. Risk Tolerance

b. Failed Investment d. Capital Loss

3. The composition that directly affects risk and value of business It is a mix of debt
and equity that a company uses to finance its operations.
a. Financial Management c. Financial Capacity
b. Financial Records d. Financial Structure

4. It shows the daily sales of the stock exchange that is written on newspapers
a. Stock Price c. Stock Market
b. Stock Table d. Stock Ownership

5. The ordinary stock of a corporation, paying no specified rate or amount of dividend

a. Preferred Stock c. IPO
b. Common Stock d. Stock Dividend

6. A common way or reason of corporation to raise money is for:

a. Expansion c. Exclusivity
b. Variation d. Ownership

7. Refers to received amount from credit investors and paid back over time with some
form of interest
a. Debt Capital c. Initial capital
b. Working Capital d. Equity Capital

FIMA – 202 Financial Management

 Polytechnic University of the Philippines - Manila
College of Accountancy and Financial Management
FIMA 202 – Financial Management
By: Allan Calderon DBA,AFBE,FLMI,PCS,CRS,PMPc,PSM,CWP,CEPP,CSSYB

8. In managing risk, this can be used to protect investors and investors for catastrophic
events.
a. Operating Practice c. Working Capital
b. Insurance d. Inventory Management

9. It is a common method of investors in reducing unsystematic risk by investing on

different assets.
a. Hedging c. Diversification
b. Deleveraging d. Insurance

10 It is the likelihood that the value of an asset will decrease or for returns on
investment, it will be negative.
a. Risk c. Unsystematic Risk
b. Risk-Return relationship d. Systematic Risk

Part II. Essay (80%)

1. Personal Insights/Self-update: Now that you have learned both Bonds and
Stocks, what will be your preference between the two if you have the money to
invest? Explain your answer. Elaborate by providing scenarios.

Although stocks have historically delivered higher returns than bonds, I will
still be considering my diversified portfolio assessment result in order to choose
between stocks or bonds for me to invest. Based on that said assessment, I am a
conservative investor, therefore; I would choose bonds. Bonds provide a stable and
predictable investment return. They are seen as low-risk and dependable, which
appeals to cautious investors. By holding onto a bond until it reaches maturity,
investors are guaranteed to receive the full face value, regardless of any market ups
and downs. Unlike stocks, bonds have a set maturity date, and the issuer is obliged
to repay the principal amount to bondholders at that time. This feature gives
investors a clear and specific timeline for receiving their investment profits.
Moreover, bonds is way more safer than stocks because in stocks, if the company
fails, all of the stockholders' investment will be lost.

To elaborate and for better understanding, look at this scenario. Imagine

you're a conservative investor looking for a steady and reliable way to grow your
money. You come across a government bond with a 5-year maturity period and an
attractive annual interest rate of 4%. Intrigued by the stability it offers, you decide to
FIMA – 202 Financial Management
 Polytechnic University of the Philippines - Manila
College of Accountancy and Financial Management
FIMA 202 – Financial Management
By: Allan Calderon DBA,AFBE,FLMI,PCS,CRS,PMPc,PSM,CWP,CEPP,CSSYB

invest $20,000 in this bond. Over the years, you receive regular interest payments,
adding a consistent income stream to your finances. As the stock market
experiences ups and downs, your bond investment remains unaffected, giving you
peace of mind. After the 5-year period, you receive the final interest payment and
the full $20,000 principal amount back. This successful bond investment not only
preserved your capital but also provided you with a reliable source of income,
showcasing the benefits of investing in bonds for risk-averse investors looking for
stability in their portfolios.

2. Among the identified types/examples of Risk in the presentation materials and

those discussed in the class, what will you consider to be the most challenging in
a business? Explain your answer.

Risk is typically associated with an event, a change in circumstances, or its

outcomes. According to a widely accepted definition, risk refers to the impact of
uncertainty on the attainment or surpassing of business objectives. This impact can be
positive, negative, or a deviation from what was expected, such as in forecasts and
projections. Identifying risks is important for effectively defining objectives and
formulating strategies to achieve them. From Political/Regulatory Risk to Management
Risk, organizations face a myriad of uncertainties that can impact their operations and
overall success. While every type of risk has its complexities, Operational Risk, for me,
emerges as one of the most challenging aspects in a business due to its pervasive
nature and potential for widespread disruption.

I think Operational Risk is quite challenging because it involves uncertainties that

directly impact a company's day-to-day operations. This includes managing the supply
chain, delivering products or services, and internal processes. I believe the reason why
it's so challenging is because it can have a domino effect throughout the entire value
chain of a business. For instance, let's consider a manufacturing company that heavily
relies on a single supplier for crucial raw materials. If that supplier unexpectedly faces a
disruption or goes out of business, the manufacturing company could encounter
significant production delays, shortages in inventory, and ultimately, dissatisfied
customers. These operational disruptions result in financial losses and harm the
company's reputation and customer trust. To effectively manage Operational Risk, a
proactive and comprehensive approach is necessary. This involves establishing robust
operational procedures, developing contingency plans, and creating supply chain
resilience. By taking these measures, I believe businesses can enhance their ability to
navigate uncertainties and maintain operational efficiency.

FIMA – 202 Financial Management

 Polytechnic University of the Philippines - Manila
College of Accountancy and Financial Management
FIMA 202 – Financial Management
By: Allan Calderon DBA,AFBE,FLMI,PCS,CRS,PMPc,PSM,CWP,CEPP,CSSYB

3. How does identifying and organizing identified risks (can be via Risk Register)
help the company’s operation? Explain its importance and provide an example or
situation so that this can be realized.

The risk register provides a clear snapshot of the current status of each risk to
the organization's risk management shareholders. By incorporating it into the risk
management plan, management gains a better understanding of the risks the
organization faces. The purpose of a risk register in company operations is to document
identified risks, analyze them, and outline plans for their treatment. It serves as a log
that identifies risks, their severity, and the actions to be taken to mitigate them. This
empowers the company to proactively identify and control threats and vulnerabilities
that could have a negative impact.

Organizing identified risks through a risk register is vital for streamlining risk
management efforts within the organization. By structuring risks in a systematic manner,
companies can prioritize their focus, track risk trends, and develop targeted mitigation
plans. This structured approach enables businesses to stay ahead of potential threats,
improve decision-making processes, and create a risk-aware culture throughout the
organization. For a better understanding, a tech startup that identifies cybersecurity
vulnerabilities in its risk register can strengthen its defenses against cyber threats by
implementing encryption measures, conducting regular security audits, and providing
employee training program. This helps protect sensitive data and ensure continuous
business operations.

4. Personal Insight: When you start your own business, do you prefer to stay as
Private Company or pursue to become a Public Company? Explain your
answer by providing what you think are advantages of your choice.

I will be aiming for both private and public companies when I started my own
business, however it’s in the matter of what comes first. Personally, I will start by having
a private company. As a conservative one based on my portfolio, I shall not disclose
everything I have and only to trust shareholders whom I’ve known deeply most. The
advantages of having a private company first is that I will learn to adapt the autonomy
and control environment inside and outside my firm. This independence creates a
focused approach to growth and enables swift decision-making, facilitating prompt
adaptations to market dynamics and allowing for agile adjustments to life's constantly
evolving circumstances. I think it is a good strategy to not take big risks first because I
just started my business. With the help of being in private while keeping in touch with
my selected shareholders, my business will go beyond its limit that will lead to success.
And when that day comes, I will be a full-fledged competitor to go and pursue of
becoming a public company.

This is when I am probably prepared for openness that will lead to more
interactions with big companies. I am then open for tradings and will surely disclose our
FIMA – 202 Financial Management
 Polytechnic University of the Philippines - Manila
College of Accountancy and Financial Management
FIMA 202 – Financial Management
By: Allan Calderon DBA,AFBE,FLMI,PCS,CRS,PMPc,PSM,CWP,CEPP,CSSYB

financial statements without hesitations yet with careful deliberations. I am up for

transparency because that is what we should do in order to gain trust and loyalty. Note
to myself that when I pursue this kind of public realm of business, I should be well-
informed about the risks that I would face and the returns I could get.

5. Research: Select 1 Type of Financial Institution (e.g Commercial Banks,

Insurance Companies) With your choice, select one company in the Philippines
(e.g. BDO, Philam Life etc.) that you are or will wanted to have
savings/investments transactions with. Research also the following:
 7a. Company History
 7b. Mission Vision
 7c. Product offering

Financial Institution: Universal Bank

Company in the Philippines: Banco de Oro (BDO)

a. Company History
Banco De Oro (BDO) traces its origins back to January 2, 1968, when it was
established as Acme Savings Bank, operating as a thrift bank. Initially, Acme
Savings Bank was among the smallest banks in the Philippines, with just two
branches located in Metro Manila. In November 1976, the Sy Group, owned by
renowned retail magnate Henry Sy, acquired Acme and rebranded it as Banco de
Oro Savings and Mortgage Bank. Transitioning to a commercial bank in December
1994, Banco de Oro Commercial Bank was born to reflect its new banking status.
Subsequently, in September 1996, the bank evolved into a universal bank, leading
to its current identity as Banco de Oro Universal Bank, known as BDO Unibank, Inc.,
a prominent universal bank in the Philippines.

b. Mission and Vision

 Corporate Mission
To be the preferred bank in every market we serve.

 Corporate Vision
To be the leading Philippine bank and financial services company that
empowers customers to achieve their goals and aspirations, combining our
entrepreneurial spirit, international perspective, and intense customer focus to
deliver a personalized banking experience that is easy, straightforward, and
convenient, while taking pride in building long-term relationships and finding
better ways to deliver offerings of the highest standard.

c. Product Offering
BDO is a full-service universal bank in the Philippines that that offers a
wide range of top-notch products and services. These include Lending (corporate
and consumer), Deposit-taking, Foreign Exchange, Brokering, Trust and
FIMA – 202 Financial Management
 Polytechnic University of the Philippines - Manila
College of Accountancy and Financial Management
FIMA 202 – Financial Management
By: Allan Calderon DBA,AFBE,FLMI,PCS,CRS,PMPc,PSM,CWP,CEPP,CSSYB

Investments, Credit Cards, Retail Cash Cards, Corporate Cash Management and
Remittances. Through its local subsidiaries, the Bank offers Investment Banking,
Private Banking, Leasing and Finance, Rural Banking and Microfinance, Life
Insurance, Property and Casualty Insurance Brokerage, and Online and
Traditional Stock Brokerage services.

Reference:
BDO. (n.d.). Corporate Profile. Retrieved from https://www.bdo.com.ph/about-
bdo/corporate-profile

Bonus question (+ point/s)

6. What is/are your favorite topic/tasks of the course? Why? How does it impact
you?

The risk-return relationship was one of the most fascinating and intriguing topics
that caught my attention during the course. The idea that taking bigger risks can lead to
higher returns, and vice versa, really clicked with me. It symbolizes a floor dance where
every step you take carries its own consequences. This topic stood out because it gave
me a practical way to analyze potential risks in business, providing a glimpse into the
balance between taking risks and returns.

Understanding the risk-return relationship has had a lasting impact on my

decision-making process, especially when it comes to business and investments. I've
learned to approach choices with caution, carefully considering the potential risks and
the expected returns before making any major decisions. This newfound awareness has
given me a sense of prudence and wisdom, helping me explore the complex world of
uncertainties with a thoughtful and strategic mindset.

Honestly, the insights gained from exploring the risk-return relationship have
been priceless. I now find myself more careful and deliberate in my actions, realizing
that not all risks are worth taking. This new perspective has influenced how I assess
risks in both my personal and professional life in which made me realize the
responsibility and foresight it shoulders when weighing the trade-offs between risk and
return. But the most lesson that really impacted me is that, this topic discussion really
had helped me to identify the risks in the business world that are very applicable in real-
life situation. I am excited to use this moral to my inevitable future that is yet to come.

“Integrity is doing the right thing. Even when no one is

watching.”

-C.S. Lewis
FIMA – 202 Financial Management
 Polytechnic University of the Philippines - Manila
College of Accountancy and Financial Management
FIMA 202 – Financial Management
By: Allan Calderon DBA,AFBE,FLMI,PCS,CRS,PMPc,PSM,CWP,CEPP,CSSYB

FIMA – 202 Financial Management