BUSINESS FINANCE Flashcards
(30 cards)
What is money
Any commodity generally acceptable both as a medium of exchange and
a measure of value.
Why was money created
To replace barter
Why did barter fail
It needed a double coincidence of wants
It lacked the means to determine product values
What are the characteristics of money
Generally acceptantable
Portable
Scarce and supply controllable
Divisible into fractions
Durable
Homogenous
Recognizable
Legal tender
What are the functions of money
Medium of exchange
Store of value
Price mechanism
What are the types of money
Coins
Notes
Bank deposits/cheques
Plastic
What is a budget/financial plan
A plan that helps you manage your money
What are the 3 types of budgets
Surplus: money allocated to be spent is less than the sum received.
Deficit :the sum of money expected to be spent is greater than the amount to be received.
Balanced: both the expected amounts of money to be received and spent are the same.
What is savings
Setting aside of a sum of money for later use in a safe place.
What is investment
Putting money into something with the expectation of growing your money over time or generating income
What are some forms of savings
- Sou Sou
- Credit Union Shares
3.Deposits i
What are some investments
- Purchase of company shares and debentures
- Government securities
What are some financial institutions
Central Bank: this can be defined as the state or government owned and controlled bank, set
up to control the financial sector of an economy.
- STOCK EXCHANGE
DEVELOPMENT BANKS
- TRUST COMPANIES
- INSURANCE COMPANIES
- CREDIT UNIONS
- INFORMAL CREDIT INSTITUTIONS
- COMMERCIAL BANKS
What is the role of central bank
Banker to Banks: to monitor the operations of commercial banks to ensure they operate
within the financial laws of the country.
iii. Financial Agent of Government
iv. Note Issue Authority
v. Exchange Control Authority
b. Operations In Financial Markets
What is stock exchange/market
A market for the buying and selling of shares, debentures and government securities.
What are the function of stock market
Allow plc’s and government to sell securities on the exchange.
What is a security
A document issued by a plc or government to raise capital.
WHAT ARE THE SECURITIES TRADED ON THE EXCHANGE
i. shares
ii. Debentures
iii. Treasury bills
iv. Government bonds
What is speculation
Trying to predict the movement of prices of securities traded on the exchange to make a gain.
What are the main types of speculation
bulls
Bears
Stags
What are development banks
These are banks which lend countries money for poverty reduction, economic development and
sustainable growth .
What are trust companies
Acts as a fiduciary, trustee or agent of trusts and agencies.
What are INSURANCE COMPANIES
provide coverage against a number of risks persons and firms face,
providing them with financial compensation if the risk occurred and losses were suffered.
What are credit unions
Allows persons to save money through the purchase of shares.
