Money

List the 6 commercial banks secondary functions

- Collecting and clearing cheques on behalf of their clients - Offering additional financial services, such as tax advice, foreign exchange dealings and the buying and selling of shares - Providing safety deposit boxes for customers to safeguard highly valued possessions, including items of jewelry and important documents such as wills - Providing money transfer facilities, such as transferring money to an overseas bank account of paying various bills, such as telephone, electricity, gas and water bills - Providing credit card facilities for the convenience of customers - both private individuals and commercial clients - Providing internet banking facilities, such as online payments, online bank transfers between bank accounts and the online purchase of shares and foreign currencies

The four functions of money

- Money acts as a medium of exchange - For something to be considered as money it must function as a way to conduct trade. Money is widely recognised and accepted as a means of payment for goods and services. - Money is a measure of value - Money isa unit of account, as it measures the market value of different goods and services. It is fur more efficient for trading purposes to express the price of goods and services in dollars (or another monetary value) rather than using products such as cloth, shells, salt or livestock - all of which have been unsuccessful forms of money in history. -Money is a store of value as it can be stored and used at a later date in the future. This means that money must be able to hold its purchasing power over time. - Money is a standard of deferred payment - This means that money is used as the standard for future (deferred) payments of debt. For example, loans taken out today arc repaid in money at some time in the foreseeable future.

Functions of a stock exchange

- Raising share capital for businesses - Facilitating company growth - Facilitating the sale of government bonds - Safety of transaction

Four functions of central banks

- The sole issuer of banknotes and coins - the central bank has the sole right to issue legal tender in its own country in other words, it is the only authority that can prim banknotes and mint coins. This helps to bring uniformity to, and improves public confidence in, the country's monetary system. - The government's bank - The central bank also manages public-sector debt and represents the government in the international financial markets, such as foreign exchange. It also maintains bank accounts for the central government - The bankers' bank-The central bank acts as the bank for other banks in the country. This function includes overseeing the cash reserves of commercial banks. This means that all banks in the country must have their accounts with the central bank, enabling the central bank easily to manage the claims made by banks against each other. - The lender of last resort - Given that the authorities require all commercial banks to keep a certain percentage of their cash balances as deposits with the central bank, these cash reserves can be used by the country's banking system during financial emergencies.

Define Stock Exchange

A stock exchange (also known as a bourse) is an institutional marketplace for trading the shares of public limited companies lt provides a platform for individuals, organisations and governments to buy and sell shares.

Define the term initial public offering

An initial public offering, or IPO, is the very first sale of stock issued by a company to the public. Public companies, on the other hand, have sold at least a portion of their shares to the public to be traded on a stock exchange.

Bartering

Bartering is the act of swapping items in exchange for other items through a process of bargaining and negotiation. For example, someone might trade five sacks of rice for one cow, or four chickens for a sheep.

Commercial banks

Does not issue currency but only adds to the money supply by creating demand deposits Acts as a state or private institution Performs foreign exchange business only on the approval of the central bank Acts as agents of the central banks Acts as a cleaning house only as an agent of the central bank

What does liquidity mean in banking terms?

Liquidity means how quickly you can get your hands on your cash. In simpler terms, liquidity is to get your money whenever you need it. Liquidity might be your emergency savings account or the cash lying with you that you can access in case of any unforeseen happening or any financial setback. Liquidity also plays an important role as it allows you to seize opportunities.

money

Money is any commodity which can be used as a medium of exchange that is accepted for the purchase of goods and services.

The six characteristics of money

S - Scarcity - Money must be available only in limited quantities U - Uniformity - Any two units of money must be uniform, that is, the same in terms of what they will buy/purchase P - Portability - People need to be able to take money with them as they go about their business D - Divisibility - To be useful, money must be easily divided into smaller denominations or units of value A - Acceptability - Everyone must be able to exchange the money for goods and services D - Durability - Objects used as money must withstand physical wear and tear