(a) State four functions of Money: (b)Explain how the following operators function on a stock exchange

Answer Details

(a) Four functions of Money

1. Medium of exchange: money is generally accepted in payment for goods and services, removing the difficulties of barter.
2. Measure of value: it provides a common standard in which the value of all goods and services can be expressed and compared.
3. Unit of account: it serves as the unit in which prices, incomes and accounts are recorded and calculated.
4. Store of value: it can be saved and held to preserve purchasing power for future use.
5. Standard of deferred payment: it allows debts and future payments to be fixed and settled in agreed money terms.

(b) How the operators function on a stock exchange

1. Bull: a speculator who buys securities expecting prices to rise, intending to resell them at a higher price before payment for the securities falls due.
2. Jobber: a member who buys and sells securities in his own name and for his own account, making a profit called the jobber's turn.
3. Broker: an individual or firm who links buyers and sellers of securities with the jobbers and earns a commission known as brokerage.
4. Stag: a speculator who subscribes to new issues of shares in the hope of selling them at a profit once dealing in them begins.