Business Finance

Question 1

Identity various

financial institutions

Answer 1

• Central bank
• commercial banks
• non-bank financial institutions
• credit unions
• insurance companies
• building societies
• micro-lending agencies
• Government agencies

Question 2

Functions offered by financial institutions

Answer 2

• loans/credit facilities
• savings and deposits
• making payments
• investments

Question 3

Services offered by finacial institutions

Answer 3

1. night safe deposits
2. online banking
3. advisory services
4. credit and debit cards
5. trustee work
6. deposit boxes
7. ATM/ABM services
8. e-trade
9. settlements services
10. remittance services

Question 4

What are the financial Regulatory Bodies

Answer 4

government organisations such as”
* Cental Bank
* Jamaica Deposit Insurance Company (JIDC)
* Financial Services Commission (FSC

Question 5

role of regulatory bodies

Answer 5

• monitor
• control
• guide
• various industry sectors
• in order to protect consumers

Question 6

functions of regulatory bodies

Answer 6

• to enforce regulations and licenses of various financial activities
• including depository
• lending
• collection
• and money transmission activities

Question 7

describe

relations between financial institutions and regulatory bodies

Answer 7

• Central Banks - ways in which Central Bank may regulate commercial banks
• variations in the liquid assets ratio
• vary or adjust the bank rate
• changing the minimum reserve requirements
• Financial Services Commissions
• Supervisor of Insurance

Question 8

outline

ways used by individuals to manage personal income

Answer 8

Ways of managing personal incomes:

(a) allocation of income relative to commitments through the use of a
budget;

(b) savings;

(c) investment; and,

(d) financial advising.

Question 9

differentiate between savings and
investments;

Answer 9

Forms of Savings:

(a) Sou sou (meeting-turn, partner, box hand);

(b) deposits in financial institutions; and,

(c) short term fixed deposits.

Forms of investments

As deferred income and investment as risk bearing:

(a) stock market;

(b) government securities: bonds, debentures; and,

(c) mutual funds.

Question 10

explain the conceptsof

short-term financing

Answer 10

Types of short-term financing:

• Trade credit,
• commercial bank loans,
• Promissory notes, i
• nstalment credit,
• indigenous credit or private money lenders,
• advances from customers, factoring,
• venture capitalists,
• crowd funding,
• angel investors

Question 11

long-term financing

Answer 11

Types of long-term financing:

(a) loans from government agencies;

(b) mortgages, debentures, shares,
insurance, investment and unit trusts.

Question 12

identify

personal sources of capital
for setting up of a business

Answer 12

Sources of personal capital:

(a) friends and family;

(b) personal savings;

(c) government grants;

(d) loans;

(e) equity;

(f) venture capital; and,

(g) crowd funding.

Question 13

identify the

purposes of basic
financial records for sole traders

Answer 13

(a) Identify types of bookkeeping systems – single and double entry.

(b) Explain the purpose of
basic financial statements:
income statement (profit
and loss) and
statement of financial position (balance sheet);
statement of cash flow.