So, you're gearing up for a viva voce (viva) related to the Philippine Stock Exchange (PSE), the Philippine Stock Exchange index (PSEi), and general finance concepts? Don't sweat it, guys! This guide will equip you with the knowledge and confidence to knock those questions out of the park. Let's dive in!

Understanding the Philippine Stock Exchange (PSE)

Let's start with the basics: the Philippine Stock Exchange (PSE). It's the heart of the Philippine stock market, where companies list their shares for public trading. Think of it as a marketplace where investors can buy and sell ownership in these companies. Why is the PSE important? Well, it plays a crucial role in the Philippine economy. It allows companies to raise capital for expansion, provides investment opportunities for individuals and institutions, and promotes economic growth.

The PSE operates under a framework of rules and regulations designed to ensure fair and transparent trading. The Securities and Exchange Commission (SEC) oversees the PSE to protect investors and maintain market integrity. The PSE itself also has its own set of listing requirements that companies must meet to be eligible for trading on the exchange. These requirements cover various aspects, including financial performance, corporate governance, and disclosure practices.

Key functions of the PSE include:

• Facilitating trading: Providing a platform for buyers and sellers to connect and execute trades.
• Price discovery: Determining the fair market value of securities through supply and demand.
• Market surveillance: Monitoring trading activity to detect and prevent market manipulation.
• Information dissemination: Providing investors with timely and accurate information about listed companies.
• Promoting investor education: Educating the public about investing in the stock market.

When preparing for your viva, make sure you understand the PSE's structure, its role in the Philippine economy, and the regulations that govern its operations. Be ready to discuss topics like initial public offerings (IPOs), trading mechanisms, and the different types of securities traded on the exchange. Also, be prepared to explain the importance of transparency and investor protection in maintaining a healthy stock market. By having a solid understanding of these concepts, you'll be well-equipped to answer questions about the PSE confidently.

Delving into the Philippine Stock Exchange Index (PSEi)

Now, let's talk about the Philippine Stock Exchange Index (PSEi). The PSEi is a benchmark index that represents the performance of the 30 largest and most actively traded companies in the Philippines. It's like a snapshot of the overall health of the Philippine stock market. When you hear news reports about the stock market going up or down, they're usually referring to the PSEi.

How is the PSEi calculated? The PSEi is a free-float capitalization-weighted index. This means that the weight of each company in the index is determined by its market capitalization (the total value of its outstanding shares) adjusted for the number of shares available for public trading (the free float). Companies with larger market capitalizations and higher free floats have a greater influence on the index's movement.

The PSEi is reviewed periodically (usually semi-annually) to ensure that it continues to accurately reflect the performance of the Philippine stock market. Companies may be added or removed from the index based on factors such as market capitalization, trading liquidity, and compliance with listing requirements.

Why is the PSEi important?

• Indicator of market performance: It provides a general overview of how the Philippine stock market is performing.
• Benchmark for investment performance: Investors often use the PSEi as a benchmark to evaluate the performance of their investment portfolios.
• Basis for investment products: The PSEi is used as the basis for various investment products, such as index funds and exchange-traded funds (ETFs).
• Economic indicator: The PSEi can provide insights into the overall health of the Philippine economy.

During your viva, expect questions about the PSEi's composition, calculation methodology, and significance as a market indicator. Be prepared to discuss the factors that influence the PSEi's movements, such as economic news, corporate earnings, and investor sentiment. You should also understand the limitations of using the PSEi as a sole measure of market performance, as it only represents the performance of a select group of companies.

Mastering General Finance Concepts

Beyond the specifics of the PSE and PSEi, a solid understanding of general finance concepts is crucial for acing your viva. Here are some key areas to focus on:

• Financial statements: Understanding the three primary financial statements – the income statement, balance sheet, and cash flow statement – is fundamental. Be able to explain what each statement reveals about a company's financial performance and position. Know how to analyze these statements using key financial ratios to assess a company's profitability, liquidity, and solvency.
• Valuation: Learn different valuation methods, such as discounted cash flow (DCF) analysis, relative valuation (using price-to-earnings ratios, price-to-book ratios, etc.), and asset-based valuation. Understand the assumptions and limitations of each method and be able to apply them to value a company or its stock.
• Risk and return: Grasp the relationship between risk and return. Understand different types of risk, such as market risk, credit risk, and liquidity risk. Learn how to measure risk using metrics like standard deviation and beta. Be able to explain the concept of diversification and how it can reduce portfolio risk.
• Investment strategies: Familiarize yourself with different investment strategies, such as value investing, growth investing, and momentum investing. Understand the principles behind each strategy and the types of companies that are suitable for each strategy. Be able to discuss the importance of asset allocation and diversification in building a well-balanced investment portfolio.
• Corporate finance: Learn about key corporate finance decisions, such as capital budgeting, dividend policy, and capital structure. Understand how companies make investment decisions, how they finance their operations, and how they manage their cash flow.
• Market Efficiency: The Efficient Market Hypothesis (EMH) suggests that asset prices fully reflect all available information. It comes in three forms: weak (prices reflect past trading data), semi-strong (prices reflect all public information), and strong (prices reflect all information, including private). Understand the implications of the EMH for investors.

During your viva, you may be asked to apply these concepts to real-world scenarios. For example, you might be asked to analyze a company's financial statements, value its stock, or recommend an investment strategy based on its risk profile. The more you practice applying these concepts, the more confident you'll be in answering these types of questions.

Common Viva Questions and How to Approach Them

Alright, let's get down to the nitty-gritty: common viva questions you might encounter. Remember, the key is not just to memorize answers but to understand the underlying concepts. This allows you to adapt your responses to different question variations. Here are some examples:

About the PSE: