WAEC SSCE - Commerce - 2020

A business unit in which savings of members are lent to others is a?

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A credit and thrift society is a business unit in which savings of members are lent to others. In this type of society, individuals come together to pool their savings and then make loans to each other. Members of the society act as both borrowers and lenders, and the interest earned on loans is shared among all members. This type of society allows individuals to access credit at favorable terms and also provides a way for members to save and earn interest on their savings.

Examples of currents assets are?

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One advantage of sole proprietorship is that?

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One advantage of sole proprietorship is that decisions are made promptly. This is because the sole proprietor has full control over the business and can make decisions without needing to consult with other owners or shareholders. This allows for quick decision-making, which is essential in a fast-paced business environment. Additionally, the sole proprietor can make decisions that are aligned with their personal values and goals, without needing to consider the interests of other owners or shareholders. This can lead to a greater sense of autonomy and flexibility in running the business. However, it's important to note that this advantage comes with the potential downside of having no one to bounce ideas off of or share the workload with.

The right to buy or sell stock exchange with a stipulated period is?

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The right to buy or sell stock exchange with a stipulated period is called an option. An option gives the buyer the right, but not the obligation, to buy or sell an underlying asset (such as a stock) at a predetermined price within a specific period of time. The price at which the underlying asset can be bought or sold is called the strike price, and the specific period of time during which the option can be exercised is called the expiration date. Options can be used for a variety of purposes, such as to speculate on the future price movements of an asset, to hedge against potential losses, or to generate income. Contango and backwardation are terms used to describe the relationship between the current price of an asset and its price in the future, particularly in the context of commodities. Contango refers to a situation where the future price of an asset is higher than its current price, while backwardation refers to a situation where the future price is lower than the current price. Brokerage refers to the commission or fee charged by a broker for executing a transaction, such as buying or selling an asset on behalf of a client.

When the cost of sales is divided by the average stock, the result is?

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The result of dividing the cost of sales by the average stock is the rate of turnover. This ratio measures how quickly a company's inventory is sold and replaced over a specific period. The cost of sales refers to the direct costs associated with producing and selling a company's products or services, including materials, labor, and other costs directly related to production. The average stock, on the other hand, represents the average amount of inventory a company holds during a given period. By dividing the cost of sales by the average stock, we get a measure of how many times a company's inventory is sold and replaced over the period. This rate of turnover can provide insights into a company's efficiency in managing its inventory, as a higher rate of turnover indicates that the company is selling its products more quickly and efficiently. It's important to note that this ratio alone does not provide a complete picture of a company's financial health, and it should be considered alongside other financial metrics.

Which of the following is not an objective of ECOWAS?

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The objective of ECOWAS that is not listed among the options is the promotion of a common language. ECOWAS is the Economic Community of West African States, a regional intergovernmental organization that aims to promote economic integration among its member states in West Africa. ECOWAS has several objectives, including the improvement of infrastructure, the encouragement of free movement of people, and the promotion of trade among member countries. However, the promotion of a common language is not listed as an objective of ECOWAS. While some member states share a common language, such as English or French, there is no official language of the organization. Therefore, the objective of promoting a common language is not a priority of ECOWAS.

A paid presentation about a product with a view to encouraging by an identified sponsor is?

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A cheque that could be cashed over the counter by the payee is?

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The activity which improves the appearance of a product and also aimed at protecting it is? 

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The activity which improves the appearance of a product and also aimed at protecting it is packaging. Packaging refers to the process of enclosing or wrapping a product in a protective material, such as a box, bottle, or plastic wrap, to keep it safe during storage, transportation, and handling. Packaging not only protects the product from damage but also makes it look more appealing and attractive to potential customers. This is why packaging is an important aspect of product design and marketing.

The bank which acts as the lender of last resort is the?

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The bank that acts as the lender of last resort is the central bank. The central bank is a government institution that is responsible for implementing monetary policy and regulating the country's financial system. One of the critical functions of the central bank is to act as the lender of last resort, which means it provides emergency funding to commercial banks when they cannot obtain funds from other sources. In times of financial crisis, commercial banks may experience a shortage of liquidity and struggle to meet the withdrawal demands of their depositors. If left unchecked, this situation can lead to bank runs and even the collapse of the banking system. To prevent such a scenario, the central bank steps in and lends money to the commercial banks, usually at a high-interest rate. The lender of last resort function is an essential tool that central banks use to maintain financial stability and prevent systemic risks to the economy. By acting as the ultimate source of liquidity, the central bank helps to instill confidence in the banking system and prevent the contagion of financial crises.

The face-to-face meeting of the seller with the buyer for the purpose of making sales is?

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The last link in a channel of distribution is the?

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The last link in a channel of distribution is the "consumer". A channel of distribution is the path that a product takes from the producer or manufacturer to the final customer or consumer. This channel typically includes various intermediaries, such as wholesalers, retailers, and agents, who help to get the product from the manufacturer to the end customer. The final link in this channel is the consumer, who is the ultimate recipient of the product. The consumer is the person or organization that actually uses or consumes the product for its intended purpose. For example, let's say a manufacturer produces a smartphone. The smartphone will typically go through various intermediaries before reaching the end consumer. The manufacturer may sell the smartphones to a wholesaler, who then sells them to a retailer. The retailer then sells the smartphones to the consumer, who will use the smartphone for personal or business purposes. Therefore, the consumer is the final link in the channel of distribution as they are the ultimate recipient and user of the product.

The difference between a country`s imports and exports of goods in a particular year is?

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An association formed by computer distributors to safeguard and promote their interest is a? 

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A partner whose name is used to boost the image of the business and does not contribute capital is a?

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A partner whose name is used to boost the image of the business and does not contribute capital is called a "nominal partner". This type of partner is also known as a "partner by estoppel". A nominal partner is not actively involved in the day-to-day operations of the business and does not contribute any capital to the business. Instead, they lend their name and reputation to the business in order to enhance its credibility and reputation. This can be beneficial in attracting customers, suppliers, and investors. While a nominal partner may not contribute capital or actively participate in the business, they can still be held liable for any debts or legal obligations of the business. This is because they are seen as a partner in the eyes of the law and are therefore responsible for the actions of the business. Overall, a nominal partner can be a useful asset for a business looking to enhance its reputation, but it is important to understand the legal implications of this type of partnership before entering into it.

production is complete when product reach the?

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The share value stated on a share certificate is?

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A specially-designed mode of transport for conveying liquid and gas is a?

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A specially-designed mode of transport for conveying liquid and gas is a tanker. A tanker is a ship or a truck that is designed to transport large amounts of liquid or gas cargo. Tankers are specially built with large, cylindrical tanks to store and transport these materials safely. They are used to transport a wide range of liquids and gases, including crude oil, gasoline, chemicals, liquefied natural gas (LNG), and more. Tankers are an essential component of the global transportation network, as they allow for the efficient and safe transport of large quantities of liquids and gases across long distances.

The issue of shares which allows existing shareholders to buy shares at a preferential price is?

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The issue of shares that allows existing shareholders to buy additional shares at a special price is called a "rights issue". This means that the company offers its current shareholders the right to purchase new shares at a discount, typically for a limited time period. For example, a company might announce a rights issue of 1 for every 10 shares held, meaning that for every 10 shares owned, a shareholder has the right to buy 1 additional share at a discounted price. The discounted price is usually lower than the market price at the time of the offer, which gives existing shareholders an incentive to take up the offer. The purpose of a rights issue is to raise capital for the company and give existing shareholders the opportunity to maintain their proportionate ownership in the company without dilution. It also allows the company to avoid the cost of underwriting and listing the shares on the stock exchange, which can be expensive. Overall, a rights issue is a way for a company to raise capital while providing an opportunity for its current shareholders to participate in the offering on favorable terms.

Which of the following is not a component of the marketing mix?

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The term you are referring to is "Production." Production is not a component of the marketing mix. The marketing mix is a concept used to describe the four main elements that make up a successful marketing strategy. These four elements are known as the "4 Ps": 1. Product: The product or service that is being sold. 2. Place: The location where the product is sold, such as a physical store or online marketplace. 3. Promotion: The ways in which the product is promoted and marketed, such as advertising, sales promotions, and public relations. 4. Price: The price at which the product is sold. Production is a separate concept that refers to the creation of a product or service. While production is an important aspect of the overall business strategy, it is not considered one of the four main components of the marketing mix.

The marketing term which regards the consumer as king that must be satisfied is?

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The additional commission paid to agents for guaranteeing payment is?

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The additional commission paid to agents for guaranteeing payment is called "del credere". Del credere is a type of commission that is paid by the seller to the agent for guaranteeing payment by the buyer. This commission is usually paid by the seller to the agent when the buyer is new or is not considered financially stable. The del credere commission is an additional fee that the seller pays to the agent in exchange for assuming the risk of non-payment by the buyer. Therefore, is the correct answer.

The document issued to a public company allowing it to commence business is the?

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A contract will not be discharged through?

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A contract will not be discharged, or ended, through acceptance. Acceptance refers to one party agreeing to the terms of the contract, but it does not mean the contract is over. A contract may be discharged through agreement, meaning both parties agree to end the contract. A contract may also be discharged through breach, meaning one party fails to fulfill their obligations outlined in the contract, causing it to end. Finally, a contract may be discharged through performance, meaning both parties have fulfilled their obligations and the contract has been completed.

In delegation of authority, the subordinate offer is?

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The safe keeping of goods produced until they are needed is?

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The term you are referring to is called Warehousing. Warehousing refers to the storage of goods in a safe and secure place until they are needed. This could be a large commercial facility or a smaller storage unit. The purpose of warehousing is to keep goods in a safe and organized place, so they can be easily retrieved when they are needed. This helps to ensure that goods are protected from damage and are readily available for sale or distribution when required. Warehousing also helps to improve supply chain management and inventory control.

An agreement that is enforceable in law is?

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An agreement that is enforceable in law is called a Contract. A contract is a legally binding agreement between two or more parties that contains the essential elements of an offer, acceptance, and consideration. It means that the parties have voluntarily agreed to the terms of the contract and have entered into an agreement that is recognized and enforceable by law. A contract can be formed orally or in writing, and it must include certain elements, such as the parties' identities, the subject matter of the agreement, the consideration exchanged, and the terms and conditions of the agreement. When a party fails to perform their obligations under the contract, the other party may seek legal remedies to enforce the terms of the contract.

A discount deducted from the invoice price of goods to enable the retailer to make profit is?

Maelezo ya Majibu

The discount that is given to a retailer from the supplier's invoice price of goods is called a "trade discount." This discount is typically given to the retailer as a percentage off the listed price, allowing the retailer to make a profit when they sell the goods to their customers at the listed price. Trade discounts are a common business practice and are often used to incentivize retailers to purchase goods in larger quantities or to establish long-term relationships with suppliers. Unlike a cash discount, which is given to a customer who pays their bill quickly, a trade discount is given to the retailer regardless of when they pay their bill. A seasonal discount is a discount that is given to customers during a particular season, and a functional discount is a discount that is given to customers for meeting certain criteria or fulfilling specific functions.

A medium of inter-departmental communication is?

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One of the disadvantages of privatization is that it?

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When a company insures the lives of all its employees collectively, the policy is?

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The type of insurance a company takes out for all its employees collectively is called "group insurance." This type of insurance provides coverage to a group of people, usually employees of a company, under a single policy. The company pays the premium, and the employees and their families are covered for specific benefits, such as life insurance, health insurance, or disability insurance. This allows the employees to have access to insurance coverage that they may not have been able to afford on their own.

The transfer of ownership of a business from government to the public is?

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Goods brought into the country for sale are the country`s?

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When goods are brought into a country for sale, they are considered as "visible imports". This means that physical goods, such as clothing or electronics, are being imported from another country and can be seen and touched. These goods are typically purchased by businesses or consumers within the importing country, which generates revenue for the foreign seller. Visible imports are important because they can impact the economy of the importing country. If there are a lot of visible imports coming in, it can be a sign that the domestic economy is not producing enough goods to meet demand. This can lead to a trade deficit, which means that the value of imports exceeds the value of exports. Overall, visible imports play a significant role in international trade and can have important implications for a country's economy.

The part of issued share capital that the company has asked the subscribers to pay for is?

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The part of issued share capital that the company has asked the subscribers to pay for is called-up capital. When a company issues shares to the public, it is essentially selling ownership stakes in the company to investors. The total value of these shares is known as the issued share capital. However, not all of this capital may be immediately paid for by the investors. The portion of the issued share capital that the company has called upon the investors to pay for is called the called-up capital. For example, if a company issues 1,000 shares at a par value of $10 per share, the total issued share capital would be $10,000. However, the company may initially only ask investors to pay for half of the shares, or 500 shares, which would make the called-up capital $5,000. The remaining 500 shares would be considered uncalled capital, as the company has not yet asked investors to pay for them. Once investors have paid for their called-up shares, this portion of the issued share capital becomes the paid-up capital. The paid-up capital represents the actual amount of capital that the company has received from investors and can use for its operations and growth. Overall, the called-up capital represents the portion of the issued share capital that the company has requested payment for, while the paid-up capital represents the amount of capital that has actually been paid by investors.

The factor of production which bear all the risk of the business is?

Maelezo ya Majibu

The factor of production that bears all the risk of the business is entrepreneurship. Entrepreneurship refers to the act of starting and running a business. The entrepreneur is the one who takes the risk of starting a new venture, investing time, money, and effort into it with the hope of making a profit. They are responsible for making decisions, finding and managing resources, and making the tough calls that can determine the success or failure of the business. In short, entrepreneurs bear the risk of the business because they are the ones who have the most to lose or gain from their decisions and actions. They are the ones who are ultimately responsible for the success or failure of the enterprise.

Which of the following activities is not an example of the extractive industry?

Maelezo ya Majibu

Weaving is not an example of the extractive industry. Extractive industry refers to activities that involve the extraction of natural resources from the earth, such as mining, drilling, and logging. These activities involve physically removing natural resources from the earth's surface or subsurface. Weaving, on the other hand, is a manufacturing process that involves transforming raw materials such as cotton, wool, or silk into textiles through a series of mechanical or manual steps. Weaving does not involve extracting natural resources from the earth. Instead, it uses raw materials that have already been extracted and processed. Therefore, weaving is not an example of the extractive industry.

The financial market where existing shares and bonds are bought and sold is the?

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The financial market where existing shares and bonds are bought and sold is called the "stock market". The stock market is where individuals and businesses can buy and sell shares of publicly traded companies, as well as government and corporate bonds. When you purchase a share of stock, you are essentially buying a small piece of ownership in that company. As the company grows and becomes more profitable, the value of your shares can increase, allowing you to sell them for a profit. Conversely, if the company performs poorly, the value of your shares can decrease. The stock market is an important part of the economy because it provides companies with a way to raise capital by selling shares to investors. It also provides investors with an opportunity to earn a return on their investment by buying and selling shares. The stock market can be influenced by a wide range of factors, including economic indicators, company performance, and geopolitical events. Overall, the stock market plays a vital role in the functioning of the modern economy and is a key way for individuals and businesses to participate in the financial system.

A form of money which was not used in the early days to trade is?

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A person engaged for the purpose of bringing his principal and a third party into a contractual relation is?

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A person engaged for the purpose of bringing his or her principal and a third party into a contractual relationship is called an "agent." An agent is a person who represents another person, known as the principal, in dealings with third parties. The agent has the authority to act on behalf of the principal and make agreements with third parties, such as buying or selling goods or services. The agent is typically paid a commission for their services. In this sense, an agent acts as a mediator between the principal and the third party, facilitating the formation of a contract.

The types of occupation that a broker belongs to is?

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The issue of prospectus by a company is an invitation to members of the public to?

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The issue of prospectus by a company is an invitation to members of the public to subscribe to the company's shares. A prospectus is a legal document issued by a company when it offers its shares to the public for the first time. The document contains information about the company, including its history, financial information, management, and the terms and conditions of the offering. By issuing a prospectus, the company is inviting members of the public to buy its shares and become part owners of the company. The process of issuing a prospectus is regulated by securities laws to ensure that investors are fully informed about the investment they are making. Once the shares are issued, the investors can buy and sell them on the stock exchange.

A feature of supermarkets which distinguishes it from other large scale retail outlets is that items sold are?

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A feature of supermarkets which distinguishes it from other large scale retail outlets is that items sold are mainly household goods. Supermarkets are retail stores that offer a wide variety of food, beverages, and household items to customers. Unlike other large scale retail outlets, such as hardware stores or car dealerships, supermarkets specialize in selling consumer goods that are primarily intended for use in households. Household goods refer to products that are used for domestic purposes, such as food, cleaning supplies, personal care products, and other everyday essentials. These goods are generally purchased by consumers on a regular basis and are an essential part of their daily lives. Supermarkets typically offer a broad range of household goods, including fresh produce, packaged foods, household cleaning supplies, personal care products, and other items that consumers use regularly. They also offer a convenient one-stop-shop experience, which allows customers to purchase all of their household goods in one location. Overall, the range of household goods sold in supermarkets is one of the key features that distinguish them from other large scale retail outlets. This specialization allows supermarkets to cater to the everyday needs of consumers and offer a unique shopping experience that is tailored to their daily lives.

One advantage of small scale retail outlet is?

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One advantage of small scale retail outlets is personal attention to customers. Unlike big stores where customers may feel like just another number, small retail stores often provide a more personalized shopping experience. The store owners and employees are often more hands-on and able to offer tailored suggestions and recommendations to customers based on their individual needs and preferences. This can lead to a higher level of customer satisfaction and loyalty.

One of the objectives of the niger basin commission is to?

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Which of the following is not a function of a consumer association?

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An insurance policy which is not a contract of indemnity is?

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A document issued by the seller`s own courier and signed by the customer to acknowledge receipt of the goods is?

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The document you are referring to is called a Delivery Note. A Delivery Note is a document that is issued by the seller's own courier (or delivery person) and is signed by the customer. The purpose of this document is to acknowledge that the customer has received the goods that were sent by the seller. This document serves as proof of delivery and shows that the goods were received by the customer in good condition. It is an important document for both the seller and the customer, as it helps to avoid disputes about whether or not the goods were received.

Commerce is defined as

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Commerce refers to all activities involved in the distribution and exchange of goods and services. This includes buying and selling of goods and services, but also encompasses other related activities such as advertising, marketing, financing, and customer support. Commerce involves the movement of goods and services from producers to consumers, and it also involves the management of supply chains, logistics, and inventory. Therefore, is the correct definition of commerce.

A request for goods from another country by an importer would be made using?

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The management function which involves measuring outcomes and taking corrective action to reduce error is?

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The management function that involves measuring outcomes and taking corrective action to reduce error is called "Controlling." Controlling is a process where the manager compares actual results to the desired results, and then takes steps to correct any deviations. This helps ensure that the organization is moving in the right direction and achieving its goals. For example, if a company's goal is to increase sales, the manager would regularly check the sales figures to see if they are meeting the target. If the sales are lower than expected, the manager might take corrective actions such as increasing marketing efforts, improving product quality, or adjusting pricing. Controlling is an ongoing process that helps organizations stay on track and make necessary changes to achieve their goals.

A sole proprietor has been advised to advertise her business in order to increase sales.

(a) i. List four advertising media she could use.
ii. State four factors she would consider in the choice of a medium.

(b) State four advantages of advertising to her business

Maelezo ya Majibu

(a) i. Four advertising media the sole proprietor could use are:

1. Social media platforms such as Facebook and Instagram
2. Local newspapers or magazines
3. Radio commercials
4. Flyers or brochures distributed in the local area

ii. Four factors the sole proprietor would consider in the choice of a medium are:

1. The target audience for her business and where they are likely to be reached
2. The cost of the advertising medium and her budget for advertising
3. The reach and frequency of the medium, or how many people it will reach and how often
4. The effectiveness of the medium, or how likely it is to generate sales for her business

(b) Four advantages of advertising to her business are:

1. Increased brand awareness: Advertising can help to raise awareness of her business among potential customers, which can lead to increased sales over time.
2. Targeted marketing: By selecting specific advertising media, the sole proprietor can target her advertising to a particular audience, such as people in a specific location or with particular interests.
3. Competitive advantage: Advertising can help to differentiate her business from competitors and communicate the unique value proposition of her products or services.
4. Increased sales: The ultimate goal of advertising is to increase sales, and effective advertising campaigns can help to generate new customers and repeat business, leading to increased revenue and profitability.

(a) Explain four factors to be considered in setting up a retail business.

(b) State how the government uses the following to regulate business:
i. registration of business name
ii. patent;
iii. trade mark;
iv. copyright.

Maelezo ya Majibu

(a) Four factors to be considered in setting up a retail business are:

1. Location: The location of the retail business can significantly affect its success. Factors such as foot traffic, accessibility, and proximity to potential customers or competitors should be considered when choosing a location.
2. Products and pricing: The retail business should consider the types of products to sell and their pricing. The products should be in demand and attract customers, while the pricing should be competitive and profitable for the business.
3. Staffing: The retail business should consider the number of employees needed and their qualifications, training, and compensation. The employees should be able to provide excellent customer service, and the business should comply with labor laws.
4. Marketing and promotion: The retail business should develop effective marketing and promotion strategies to attract customers. This can include advertising, social media, and public relations activities.

(b)

1. i. Registration of business name: The government requires businesses to register their names to prevent confusion with other businesses and protect consumers from fraud. By registering a business name, the government ensures that the business is legally recognized and operates within the law.
2. ii. Patent: A patent is a government-granted monopoly that gives an inventor exclusive rights to make, use, and sell an invention for a certain period of time. The government uses patents to encourage innovation by granting inventors exclusive rights to their inventions, which can lead to increased investment in research and development.
3. iii. Trade mark: A trademark is a distinctive sign or symbol that identifies a business or product and distinguishes it from others. The government uses trademarks to protect consumers from confusion and ensure fair competition among businesses.
4. iv. Copyright: Copyright is a legal protection that gives authors and creators exclusive rights to their original works, such as books, music, and art. The government uses copyright to encourage creativity and ensure that authors and creators are fairly compensated for their work.

(a) State four functions of a cartel

(b) Explain three advantages and three disadvantages of public enterprises 
 

Maelezo ya Majibu

a. Four functions of a cartel are:

1. Price Fixing: Cartels aim to control the supply of a particular product or service, in order to manipulate prices and maximize profits.
2. Market Sharing: Cartels may divide up the market among its members, with each member having exclusive rights to sell their products in a specific geographic area.
3. Output Restriction: Cartels may limit the total amount of a product that is produced, in order to maintain high prices and maximize profits.
4. Information Sharing: Cartels may share information about production costs, sales data, and market trends, in order to coordinate their efforts and maximize their profits.

b. Three advantages of public enterprises are:

1. Providing public goods: Public enterprises can provide goods and services that are deemed important for the public good, such as utilities, transportation, and healthcare.
2. Promoting economic development: Public enterprises can play a role in promoting economic development by investing in infrastructure and creating jobs.
3. Ensuring stability: Public enterprises can help ensure economic stability, by providing a stable source of income and employment in times of economic uncertainty.

Three disadvantages of public enterprises are:

1. Inefficiency: Public enterprises are often criticized for being inefficient, due to a lack of competition and a lack of incentives for performance.
2. Political interference: Public enterprises may be subject to political interference, as they are often controlled by the government and may be used to further political goals.
3. Financial burden: Public enterprises can be a financial burden on the government, as they may require substantial government subsidies or guarantees to remain operational.

(a) State five functions of an Export Promotion Council.

(b) Outline five roles performed by the Customs and Excise Authority towards the growth of commerce

Maelezo ya Majibu

(a) Five functions of an Export Promotion Council are:

1. Market research: Conducting market research to identify potential export markets and opportunities for local businesses.
2. Export development: Developing strategies to promote exports and increase the competitiveness of local businesses in international markets.
3. Product development: Assisting local businesses in the development of export-ready products that meet international quality and safety standards.
4. Capacity building: Providing training and support to local businesses to improve their export readiness, including training on export documentation, packaging, and logistics.
5. Policy advocacy: Advocating for policies and regulations that support the growth of exports and the competitiveness of local businesses in international markets.

(b) Five roles performed by the Customs and Excise Authority towards the growth of commerce are:

1. Trade facilitation: The Customs and Excise Authority plays a critical role in facilitating trade by ensuring that imports and exports comply with regulations and are processed in a timely and efficient manner.
2. Revenue collection: Customs and excise duties are a significant source of government revenue, and the Customs and Excise Authority is responsible for collecting these duties.
3. Protection of public health and safety: The Customs and Excise Authority is responsible for enforcing regulations related to the import and export of goods that may pose a threat to public health and safety, such as drugs and hazardous materials.
4. Protection of intellectual property: The Customs and Excise Authority is responsible for enforcing regulations related to the import and export of goods that may infringe on intellectual property rights, such as counterfeit goods.
5. Border security: The Customs and Excise Authority plays a key role in maintaining border security by preventing the import and export of illegal goods, such as weapons and drugs. This helps to maintain the safety and security of citizens and businesses in the country.

(a) State four functions of a Stock Exchange.

(b) Explain the following types of securities traded on the Stock Exchange:
i. debentures
ii. bonds
iii. shares 
iv. stock.

Maelezo ya Majibu

(a) Four functions of a Stock Exchange are:

1. Providing a platform for companies to raise capital: Companies can sell shares or other securities to investors in order to raise money for business activities.
2. Facilitating liquidity and price discovery: Stock exchanges provide a marketplace where investors can buy and sell securities, thereby ensuring that investors can easily and quickly convert their investments into cash.
3. Providing a measure of company performance: Share prices are often used as a barometer of a company's performance, and the stock exchange provides a public record of this performance.
4. Providing a source of investment opportunities: The stock exchange provides investors with a range of investment opportunities, allowing them to choose from a variety of companies and industries.

(b)

1. Debentures are a type of long-term debt instrument issued by companies to raise capital. They are similar to bonds, but unlike bonds, they are not secured by specific assets. Instead, debentures are backed only by the general creditworthiness and reputation of the company that issued them.
2. Bonds are also a type of long-term debt instrument, but unlike debentures, they are typically secured by specific assets such as property or equipment. Bonds typically have a fixed interest rate and maturity date, and investors can receive interest payments and the return of their principal investment at maturity.
3. Shares represent ownership in a company and are issued by companies that want to raise capital. Investors who purchase shares become part owners of the company and can participate in the company's profits through dividends or by selling their shares at a higher price than they paid.
4. Stock is a term that is often used interchangeably with shares, but it can also refer to a company's total outstanding shares. When a company issues shares to raise capital, the total number of shares outstanding increases. Investors who own stock in the company own a portion of the company's assets and profits, and the price of the stock reflects the market's assessment of the company's performance and future prospects.

The following information relates to Raisa's grocery store as of 31st December 2018.

You are required to calculate:
(a) cost of goods sold
(b) gross profit
(c) net profit
(d) percentage of gross profit

Maelezo ya Majibu

Workings:

i. Cost of goods sold = 139,000

ii. Gross profit = 91,000

iii. Net profit 62,000

iv. percentage of gross profit = gross profitsales $\frac{\text{<br> <span style="font-family: Ubuntu;"> gross profit</span>}}{\mathrm{<span\; style="font-family:\; Ubuntu;">𝑠</span>}\mathrm{<span\; style="font-family:\; Ubuntu;">𝑎</span>}\mathrm{<span\; style="font-family:\; Ubuntu;">𝑙</span>}\mathrm{<span\; style="font-family:\; Ubuntu;">𝑒</span>}\mathrm{<span\; style="font-family:\; Ubuntu;">𝑠</span>}}$ x 100%

= 91,000230,000×1001 $\frac{91,000}{230,000}\times \frac{100}{1}$ 

= 39.57%

Emeka has been a sales representative for three years but has never met his target.

(a) State five reasons that could have accounted for his inability to meet his target.

(b) Explain five promotional tools he could use to stimulate sales of his company's products

Maelezo ya Majibu

a. Five reasons that could have accounted for Emeka's inability to meet his target are:

1. Lack of knowledge about the product: If Emeka does not have a good understanding of the features and benefits of his company's products, he may not be able to effectively sell them.
2. Lack of sales skills: Emeka may not have strong sales skills, such as the ability to effectively communicate with potential customers, negotiate deals, and close sales.
3. Poor time management: If Emeka is not using his time effectively, he may not be able to reach as many potential customers as he needs to in order to meet his target.
4. Competition: Emeka may be facing strong competition from other sales representatives or companies, which can make it difficult to reach his target.
5. Market conditions: The market conditions, such as the state of the economy or changes in consumer preferences, may make it difficult for Emeka to meet his target.

b. Five promotional tools Emeka could use to stimulate sales of his company's products are:

1. Advertising: Emeka could use advertising in various media, such as print, television, or online, to reach a large number of potential customers and raise awareness of his company's products.
2. Sales promotions: Emeka could offer special deals or discounts to encourage customers to make a purchase.
3. Public relations: Emeka could use public relations strategies, such as media relations and event sponsorship, to build positive relationships with customers and raise awareness of his company's products.
4. Personal selling: Emeka could use personal selling techniques, such as face-to-face presentations and telephone calls, to directly communicate with potential customers and build relationships with them.
5. Direct mail: Emeka could use direct mail marketing to send promotional materials, such as brochures or catalogs, directly to potential customers.

(a) List six credit instruments used in business transactions

(b) Mr. Sylva is considering hire purchase as a source of finance for his business operations. State four advantages and three disadvantages of this source of finance.

Maelezo ya Majibu

(a) Six credit instruments used in business transactions are:

1. Bank loans
2. Trade credit
3. Commercial paper
4. Bonds
5. Debentures
6. Letters of credit

(b) Hire purchase is a type of financing arrangement where the buyer acquires an asset and pays for it in installments over time. Here are four advantages and three disadvantages of hire purchase as a source of finance:

Advantages:

1. Access to assets: Hire purchase allows a business to acquire an asset, such as machinery, vehicles, or equipment, without having to pay the full cost upfront, thereby preserving its cash flow for other uses.
2. Flexible repayment terms: Hire purchase provides flexible repayment terms, such as monthly, quarterly, or annual payments, that can be tailored to the business's cash flow and revenue cycle.
3. Fixed interest rate: Hire purchase has a fixed interest rate, which means that the business can budget and plan its cash flow with certainty, as it knows the exact amount of each installment.
4. Asset ownership: The business becomes the owner of the asset once it completes all the installments, which means that it can use, sell, or trade the asset as it sees fit.

Disadvantages:

1. Higher cost: Hire purchase is usually more expensive than paying cash upfront, as the business has to pay interest on the amount borrowed, as well as any other fees and charges.
2. Risk of default: If the business defaults on its payments, the lender can repossess the asset, which can cause disruption to the business's operations and damage its credit rating.
3. Impact on balance sheet: Hire purchase can impact the business's balance sheet, as the asset is recorded as a liability until all the installments are paid, which can affect the business's creditworthiness and financial ratios.

Overall, hire purchase can be a useful source of finance for businesses that need to acquire assets but have limited cash flow or capital. However, it is essential to weigh the advantages and disadvantages carefully before committing to a hire purchase agreement.