Page 196 & p197

Question 1

What is the meaning of INTRINSIC VALUE

Answer 1

Determining the VALUE of an asset through a complex financial model, in other words, NOT using the actual current market PRICE of the asset

Finding an asset’s value using an accurate financial model

Question 2

Money is an acceptable means of …..

Answer 2

exchange

Question 3

The economy would not function without money. Money can be used for a medium of ..(a)…,
a ..(b).. of value,
a ….(c).. of value and
a standard of deferred …(d)..

Answer 3

a) exchange
b) measure
c) store
d) payment

Question 4

Name the 4 technical functions of money

Answer 4

1) Medium of exchange
2) Measure of value
3) Store of value
4) Standard of deferred payment

Question 5

What does ‘deferred’ payment mean?

Answer 5

postpone / pay at a later date

Question 6

Explain MEDIUM OF EXCHANGE

Answer 6

Goods were normally exchanged for other goods (barter system). Money is now used as a form of payment. Goods/services are exchanged for money.

Question 7

Explain MEASURE OF VALUE

Answer 7

The value of goods/services are measured in monetary terms

Question 8

Explain STORE OF VALUE

Answer 8

Money is durable. It can be used over and over again.

Question 9

Explain DEFERRED PAYMENTS

Answer 9

You can buy something now and pay for it over an extended period of time. This is how we buy on credit. (for example: buy groceries and pay at the end of the month)

Question 10

During the barter system, different items were used as money. Name a few.

Answer 10

seashells / beads / animals

Question 11

The money we use is called LEGAL ……
Why?

Answer 11

tender

It has been declared by government to be the country’s money system.

Question 12

Who has the sole right to issue money in South Africa?

Answer 12

South African Reserve Bank (SARB)

Question 13

The coins are divided into a number of DENOMINATIONS. (R1, R2, R5, etc.) All the coins in circulation are called…

Answer 13

token money

Question 14

Token money’s intrinsic value is …(a)… than their face value

Answer 14

less
(for example: the value of the metal used to make an R5 is less than the value of the R5 coin itself)

Question 15

What is a watermark on a bank note?

Answer 15

faint design that can be seen when held against the light

Question 16

Name a few features of South African bank notes

Answer 16

• made of special paper
• each note has a unique serial number
• watermark (animal & value of the note)
• silver security thread with South African
  coat of arms on it
• big 5 animals feature on notes
• back of notes: feature the 3 economic
  sectors
• different colours
• governor’s signature on each note