Credit and crediting (topic)

Credit – transecting between two parties in which one (the creditor or lender) supplies money, goods/services, or securities in return for a promised future payment by the other (the debtor or borrower). [Creditor is someone who money is owed to. Debtor is someone who owes money]. Credit given is an indication of trust in that person to pay for the goods given or money lent. Credit transections normally include the payment of interest to the lender. Credit may be extended by public or private institutions to finance business activities, agricultural operations, consumer expenditures, or government projects. Most modern credit is extended through specialized financial institutions, of which commercial banks are the oldest and most important. The lender must judge each loan he makes on the bases of the character of the borrower (his intention to repay), his capacity to repay (based on his potential for earning income), and his collateral (property or other goods that you promise to give someone if you cannot pay back the money (they lent you). [Loan is an amount of money that you borrow from a bank]. Customers and lenders may publicly regulate the terms of credit transections to prevent abuses.

Questions:

1. What is meant by the term credit?
2. What does credit normally include?
3. What institutions may extend credit?
4. What may credit finance?
5. How is most modern credit expended?
6. How must the lender judge each the loan?
7. What does the character of the borrower imply?
8. What is the debtor’s capacity to repay based upon?
9. What does the debtor’s collateral imply?

Marketing

Marketing and its functions.Marketing is the ability to asses, by whatever means, the needs of the consumer, then using the available resources, design, produce, advertise, and deliver the goods at the right time and at the right place and price to the customer. Marketing’s principal function is to promote and facilitate exchange. Through marketing, individuals and groups obtain what they need and want by exchanging products and services with other parties. Such a process can occur only when there are at least two parties, each of whom has something to offer. In addition, exchange cannot occur unless the parties are able to communicate about what they offer and to deliver what they offer. Marketing is not a coercive process: all parties must be free to accept or reject what others are offering. So defined, marketing is distinguished from other modes of obtaining desired goods, such as through self – production, begging, theft, or force. Marketing is not confined to any particular type of economy, because goods must be exchanged and therefore marketed in all economies and societies except perhaps in the most primitive one. Furthermore, marketing is not a function that is limited to profit – oriented business , even such institutions as hospitals, schools, and museums engage in some forms of marketing.

MONEY

Money and its functions.

Money is a commodity commonly accepted as a medium of economic exchange. The idea of money as a universal equivalent is familiar to us since our childhood. Money circulates from person to person and country to country, thus facilitating trade, and it is the principal measure of wealth. Money has four functions: 1)to serve as a medium of exchange, a commodity universally accepted in exchange for goods and services and for the discharge of debts or for the discharge of contracts; 2) to act as a unit of account, the unit that makes the operation of the price system possible and provides the basis for keeping accounts and calculating cost, profit, and loss; 3) to serve as a standard of deferred payments, the unit in which loans arc made and future transactions arc fixed; |4) to provide a store of wealth, a convenient form in which to hold any income not immediately required for use.

QUESTIONS:

1. What is meant by the term “money”?
2. How many functions does money have?
3. What does money serve as?
4. What does money act as?
5. What does money make?
6. What does money provide?
7. What does money calculate?
8. What is the third function of money?

What is finance?

Thе field of finance is broad and dynamic. It directlyeffects the lives of every person and every organization, financial and non – financial, private or public, large or small, profit – seeking or non – profit. Finance can be defined as the art science of managing money. All individuals and organizations earn or raise money and spend or invest money. Finance is concerned with the process, institutions markets, the instruments involved in the transfer of money among and between individuals, businesses and governments. Finance can be defined at both the aggregate or macro level and the firm or micro level. Finance at the macro level is the study of financial institutions and financial markets and how they operate within the financial systems. Finance at the micro level is the study of financial planning, asset management, and fund raising for business firms and financial institutions. Finance has its origin in the fields of economics and accounting.

Bank and its classes

Bank – is an institution that deals in money and it substitutes and provides other financial services. Banks accept deposits and make loans and derive a profit from the difference in the interest rates. They also have the power to create money. The two major classes of banks are commercial and central banks. Commercial banks accept savings deposits, make loans and other investments and offer financial services that facilitate the exchange of funds among individuals and institutions. In addition to the profit derived from the difference in the interest rates, commercial banks charge fees for various services. Central banks are involved in the issue of money and maintain the country’s foreign currency reserves. Central banks maintain the accounts of other banks and supervise their activities. Central banks act as bankers to governments, as the designers of monetary and credit policies and as lenders of last resort to commercial banks in the case of a financial crisis. Central banks also play a significant psychological role as guarantors of the monetary system. Central banks may be nationalized organizations and are subject to government control, but some of them can have independence from governmental supervision.