Prelim

Question 1

The direct exchange of one commodity for another

Answer 1

Barter

Question 2

Limitations in Barter

Answer 2

1. Double coincidence of wants
2. Lack of standard unit of value
3. Indivisibility of goods
4. Storage and perishability issues

Question 3

Types of Commodity money

Answer 3

1. Animal products
2. Agricultural goods
3. Natural objects
4. Metal objects
5. Electronic banking

Question 4

It comes from he word “credere” and is a product of necessity

Answer 4

Credit

Question 5

A transfer of goods, services, or funds giving rise to the obligation that must be discharged in the future

Answer 5

Credit

Question 7

The direct exchange of one commodity for another

Answer 7

Barter

Question 8

Limitations of Barter

Answer 8

1. Double coincidence of wants 2. Lack of standard unit of value
2. Indivisibility of goods
3. Storage and perishability issues

Question 9

Factors of Credit

Answer 9

1. There is a transfer of goods, services or funds
2. Giving rise to the obligation
3. That obligation must be discharged in the future

Question 11

Cost of using credit

Answer 11

1. Interest
2. Operating expenses
3. Risk

Question 12

Foundations of Credit

Answer 12

1. Trust
2. Proper facilities and information
3. Stability of money
4. Stability of government

Question 13

Credit as a medium of Exchange

Answer 13

1. Credit of general acceptability
2. Credit of limited acceptability

Question 14

This is where People are willing to accept in payment of goods delivered or services rendered.
1. Must be issued by a promisor trusted by people
2. Must be in convenient denominations
3. Easily recognizable
4. Difficult to counterfeit

Answer 14

Credit of general acceptability

Question 15

This is when issued under the conditions that make them acceptable only within a restricted field.
– Promissory note
– Bill of exchange
– Bank credit

Answer 15

Credit of limited acceptability

Question 16

According to form

Answer 16

1. Direct loan
2. Discount
3. Overdraft

Question 17

Most common type of loan

Answer 17

Direct loan

Question 19

The lender collects the interest in advance and gives the balance to the borrower.

Answer 19

Discount

Question 20

Amount withdrawn is in excess of the net balance in the bank.

Answer 20

Overdraft

Question 21

According to type of users

Answer 21

1. Consumer or personal credit
2. Retail credit
3. Installment credit
4. Mercantile or commercial Credit
5. Bank credit
6. Investment credit

Question 22

Credit for personal needs

Answer 22

Consumer or personal credit

Question 23

extended to those customer of good credit standing

Answer 23

Retail credit

Question 24

Small downpayment followed by equal monthly installments

Answer 24

Installment credit

Question 25

usually extended to commercial and trade investors, and is used to finance the purchase of inventories

Answer 25

Mercantile or commercial Credit

Question 26

short-term credit extended to businessmen for working capital purposes

Answer 26

Bank credit

Question 27

long-term credit usually for the purpose of obtaining fixed asset

Answer 27

Investment credit

Question 28

According to maturity

Answer 28

1. Short-term credit 2. Intermediate or medium-term credit 3. Long-term credit

Question 29

According to security

Answer 29

1. Secured loans 2. Unsecured loans

Question 30

based solely on the credit standing of the borrower

Answer 30

Unsecured loan

Question 31

guaranteed by some property or collateral

Answer 31

Secured loans

Question 32

According to purpose

Answer 32

1. Agricultural credit 2. Commercial Credit 3. Industrial credit 4. Consumer credit

Question 33

Its purpose is to finance the cultivation, development and improvement of agricultural land.

Answer 33

Agricultural credit

Question 34

Types of agricultural credit

Answer 34

1. Time loan 2. Crop loan 3. Commodity loan

Question 35

used to finance the development and improvement of the land.

Answer 35

Time loan

Question 36

utilized for the production of crops.

Answer 36

Crop loan

Question 37

used to finance the marketing and distribution of harvested crops.

Answer 37

Commodity loan

Question 38

used to finance the production and distribution of goods

Answer 38

Commercial Credit

Question 39

used to finance the manufacture of goods, construction of plant buildings or acquisition and installation of equipment or machinery.

Answer 39

Industrial credit

Question 40

used to finance immediate consumption such as purchase of goods or services, small investment purposes, tax payments, and other short-term obligations.

Answer 40

Consumer credit