Explanation

(a) Credit instruments used in business transactions:

1. Promissory note
2. Bill of exchange
3. Cheque
4. Letter of credit
5. Bond
6. Bank draft
7. Trade bill
8. Accommodation Dill.

(b)The advantages of hire purchase as a source of finance for Mr. Sylva's business operations are:

i. Promotion of durable goods: It facilitates the promotion of durable goods.

ii. Increase in profit: The profit will increase as a result of the availability of hire purchase.

iii. Increase in turnover: It increases the rate of turnover.

iv. Large-scale production: It leads to large-scale production as a result of an increase in demand.

v. Opportunity to acquire expensive goods: It presents the opportunity to acquire expensive goods which he or she could not have been able to buy by cash

vi. Access to credit: He has access to credit which he could otherwise not have obtained from banks.

The disadvantages of hire purchase as a source of finance for Mr. Sylva's business operations are:

i. Additional costs: It usually brings additional costs as a result of court action for recovery of den

ii. Court action: It can lead to court action.

iii. Paying more than necessary: He will pay more than he Would pay under cash transactions.

iv. Payment of a high interest rate: He will be paying a high rate of interest

v. Inability to negotiate for better deals: He may not be able to negotiate for a better deal

Correct Answer: A. Stability

Explanation

(a) A contract can be defined as an agreement between two or more persons which is intended by them to have legal consequences:

(b) The essential elements of a valid contract are:

(i) An offer and unqualified acceptance.

(ii) An intention to create legal relations.

(iii) Valuable consideration.

(iv) Contractual capacity of the parties.

(v) Genuiness of consent.

(vi) Legality of objectives.

(vii) Possibility of performance.

(viii) Certainty of terms.

(ii) Offer and Acceptance: In a valid contract, there must be an offer and unqualified acceptance by the two parties. Genuiness of consent: For a contract to exist the consent of the parties must be genuine. It must not be under duress, undue influence or misrepresentation.

(iii) Intention to create legal relations: It must be quite clear from the terms of the agreement that the parties intended to create a legally binding contract.

Correct Answer: D. Seling one line of goods

Correct Answer: C. marketing concept

Correct Answer: A. marketing

Correct Answer: A. trading

Correct Answer: D. existing shares of quoted companies

Explanation

(a) CIF (Cost, Insurance and Freight): A price quoted C.I.F. means that it includes the cost of goods, insurance premium and transporting the goods to the port of destination. The importer is responsible for other charges thereafter.

(b) FOB (Free on Board): All the expenses until the goods have been placed on board of a ship are borne by the seller while the buyer is responsible for the cost of unloading the goods.

(c) FOR (Free on Rail): This price quotation means that the seller has paid all charges including loading the goods on rail. The buyer has to pay subsequent charges.

(d) FAS (Free Alongside Ship): This price quotation means that the goods are delivered to the side of the ship free and the buyer is reponsible for the cost of loading on to the ship.

(e) C.F (Cost and Freight): This quotation means that the seller is only to pay for the freight while the buyer takes out insurance for the goods as the price quoted includes only the cost of the goods and freight charges

Correct Answer: C. government financial grants