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Chapter 8

chapter 8 textbook notes

3 Pages

Management (MGT)
Course Code
Chris Bovaird

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Chapter 8
·money: object generally accepted by people as payment for goods
portable (light weight & easy to handle), divisible (break down), durable (dont die), stable
·Barter economy: goods exchange for one another (time consuming)
·money function:
medium of exchange: instead of trading, use money to buy
store value: store for future use
unit of account: can measure goods
·Credit card (plastic money): do not qualify as money, money substitute, temporary medium of
exchange, cant store value, convenient, profitable for issuing company
Profit: charge annual fee and interest, merchant accept credit card pay fee to card issuer
·Financial institution: flow of money from surplus to those with deficit
·Financial Pillar # 1 Chartered banks
·Chartered banks: privately owned, profit seeking, serve individual, non-business organization &
business as financial intermediary
chequing saving account, loan, main source of short term loan for business firm
largest and most important
·Bank service
pension service: saving plan for retirement (invest money for customer)
trust service: management of fund left in the band trust
international service: currency exchange, letter of credit, banker acceptance
letter of credit: promise by bank to pay money to business (if certain conditions meet)
banker acceptance: promise that the bank will pay specified amount of money at future date
·Chequable deposit (DD): chequing account
customer deposit, can write cheque immediately
·Term deposit: money remain in the bank for period of time with interest paid
regular passbook saving account: for small saver and non profit organization
guaranteed investment certificate: longer time, higher interest, cant be cashed before maturity, less

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Chapter 8money object generally accepted by people as payment for goodsportable light weighteasy to handle divisible break down durable dont die stableBarter economy goods exchange for one another time consumingmoney functionmedium of exchange instead of trading use money to buystore value store for future useunit of account can measure goodsCredit card plastic money do not qualify as money money substitute temporary medium of exchange cant store value convenient profitable for issuing companyProfit charge annual fee and interest merchant accept credit card pay fee to card issuerFinancial institution flow of money from surplus to those with deficitFinancial Pillar1 Chartered banksChartered banks privately owned profit seeking serve individual nonbusiness organizationbusiness as financial intermediarychequi
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