Differences between whole life policy and endowment policy and other business studies paper 1 questions and answers

Differences between whole life policy and endowment policy.

 Whole life policyEndowment  policy
(a)Compensation is paid after the death if insured.Compensation is paid after the expiry of agreed period.
(b)Premiums are paid throughout the life of the insured.Premiums are paid only during the agreed period.
(c)Benefits goes to the beneficiaries.  Benefits go to the insured unless death occurs before expiry of agreed period.
(d)Aims at financial security to the beneficiaries.Aims on financial security of the assured and dependants.

The uses of the following documents in international trade.

(i) Bill of lading.

  • It enables the holder to take possession of goods. It entitles the holder to take possession to goods imported.
  • Can use it as a document for future reference.
  • Can use the bill of lading to countercheck his goods on arrival.
  • Can use it to get money for clearing, once the goods have come.
  • Can use it as a proof of business transaction.
  • Can use the bill to claim compensation in case all the goods indicated do not reach him.
  • It acts as evidence that goods have been received by the ship owner.
  • It is negotiable document in that the importer can transfer ownership of the goods by indicating and signing on it.

(ii) Indent

  • It used to assist the exporter of agent to know where to buy goods.
  • It used to assist the agent to select on exporters.

Factors to consider when identifying a business opportunity.

  • Objectives of the business.
  • Availability of skills to operate the business.
  • Availability of markets.
  • Technology.
  • Availability of raw materials.
  • Government policy.
  • Amount of capital required.
  • Level of competition.
  • Difficulties in marketing.
  • Possibility of expansion.
  • Impact of the business on the environment.
  • Security.
  • Level of infrastructure development

Circumstances which may necessitate the government to nationalize some industries.

  • When it want to protect the consumer against private monopoly.
  • If there has been wasteful competition by several private companies.
  • If the private company was irregularly acquired by private investors from the government.
  • If the activity carried out by the private company should have national benefit but not individual benefit e.g. mining.
  • If the firm has relied on government subsidy for so long.
  • Where there is need to prevent foreign dominion in the key sector of the economy.
  • When the government want to provide essential services at affordable prices.
  • When the government desires to create job opportunities.
  • If the business is dealing with sensitive goods which cannot be left in the hands of private sector due to security reasons.

Importance of the following financial ratios to a business.

(i) Margin.

  • Helps in setting of selling price.
  • Can be used in calculation of profits or losses.
  • Used in determining sale for a given period of time

(ii) Rate of stock turnover.

  • Used to determine the fast and slow moving stock.
  • May be used to compute gross profit or loss

Advantages of using television as an advertising media.

  • Combines sound, words and motion pictures which make advertising appeal.
  • Show most product features.
  • Educate customers on the usage of products.
  • They are entertaining and hard to ignore.
  • Appreciated by both literate and illiterate.
  • Advertisement may be aired as frequently as required.
  • Advertisement may be modified as need arises
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