FINANCE : ALTERNATIVE PAYMENTS

Jun 21st, 2015
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1. Money - Money is an asset that is generally accepted as payment for goods and services or repayment of debt. Money has three characteristics:1. It is a means of payment 2. It is a unit of account 3. It is a store of value

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Chapter 1Alternative paymentsChecksDebit and credit cardElectronic paymentAnswer questions for a loanHow likely are you to be able to repayFigure out the riskWhat would be the effect on the share price of a listed company if the company stops reporting?The information gathering costs will increaseWhich will most likely result in decrease in demandThe perceived risk will increaseThis will increase the needed compensationResult: Share price will fallWhy do large companies sell financial instruments directly to (small) investors while small companies often finance their operations from financial institutions such as banks? Smaller companies have higher information gathering costs which investors are unwilling to incurBanks are specialized in gathering information and evaluating the risks, therefore they are more likely to lend to smaller businesses.Chapter 21. MoneyMoney is an asset that is generally accepted as payment for goods and services or repayment of debt.Money has three characteristics:1. It is a means of payment2. It is a unit of account3. It is a store of value1.1 Money: Means of PaymentPeople insist on payment in money.Barter requires a double coincidence of wants.Finalizes paymentsMake transactions smoother1.2 Money: Unit of AccountMoney is used to quote pricesa standard of valuePrices provide the information needed to ensure resources are allocated to their best uses. Makes relative price comparisons easi

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