JAMB UTME - Commerce - 2025

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Devaluation is a deliberate reduction in the official value of a country's currency in relation to other currencies, usually carried out by the government or central bank as a policy decision. It makes the country's exports cheaper and its imports more expensive, and it is an intentional, one-off official act rather than a natural market movement.

The other terms describe different situations. Fluctuation refers to the everyday rise and fall in a currency's exchange value caused by market forces, not a deliberate government reduction. Inflation is a general and sustained rise in the prices of goods and services within an economy, not a change in the currency's value against other currencies. Deregulation is the removal of government rules controlling an industry or market, which has nothing to do with currency value.

Examination reminder: devaluation is always deliberate and official; if a question describes a government decision to lower a currency's international value, that is the term to use, not fluctuation.

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Net profit on a simple trading transaction is the selling price minus every cost incurred to acquire and prepare the item for sale. Here the total cost is the purchase price of the bicycle plus the cost of repairing it, since the repair was necessary before the bicycle could be resold.

1. Cost price of the bicycle: \( \text{₦}20{,}000 \)
2. Repair cost: \( \text{₦}5{,}000 \)
3. Total cost: \( \text{₦}20{,}000 + \text{₦}5{,}000 = \text{₦}25{,}000 \)
4. Selling price: \( \text{₦}30{,}000 \)
5. Net profit: \( \text{₦}30{,}000 - \text{₦}25{,}000 = \text{₦}5{,}000 \)

Net profit of ₦5,000 is what is left once both the original cost and the repair expense are covered by the sale proceeds. A figure that ignores the repair cost, such as taking only the purchase price away from the selling price, would overstate the profit, and a figure that adds costs together instead of subtracting them from the selling price would not represent profit at all.

Always add every cost of acquiring and preparing an item, not just the purchase price, before subtracting from the selling price to find net profit.

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On a stock exchange, an option contract gives its holder the right, but not the obligation, to buy or sell a stated quantity of shares at a fixed price within a set period. There are two basic types, distinguished by which right they grant.

A put option grants the holder the right to sell shares at the agreed price. The holder buys this right hoping the market price will fall, so they can sell at the higher, pre-agreed price and profit from the difference. This is the opposite of a call option, which grants the right to buy.

A frequent confusion is assuming every option is about buying, since buying shares is the more familiar transaction to beginners. Remembering the pairing helps: a call is linked to buying, and a put is linked to selling shares onto the market.

Exam takeaway: whenever a question names put or call in the context of options, immediately map put to the right to sell and call to the right to buy.

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This question tests knowledge of the recognized principles that govern insurance contracts, which are insurable interest, utmost good faith, indemnity, subrogation, contribution, and proximate cause.

Each of these principles has a specific meaning. Insurable interest requires that the person taking out a policy will suffer a genuine financial loss if the insured event occurs. Indemnity means the insured should be restored to the same financial position they were in before the loss, no more and no less. Subrogation allows the insurer, after paying a claim, to take over the insured's right to recover the loss from any third party responsible for it.

"Insurable risk" is not one of the formally recognized principles of insurance; it is simply a general description of a risk that is capable of being insured, rather than a rule that governs how an insurance contract operates or how claims are settled. Because it does not describe an operating principle of insurance in the way that indemnity, subrogation, and insurable interest do, it is the term that does not belong among the principles of insurance.

When a list mixes formally named principles with a general descriptive phrase, the descriptive phrase, one that only labels a category rather than a rule governing the contract, is usually the option that is not a true principle.

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This question tests knowledge of basic retail pricing terms used in commerce.

When a seller buys an article and later sells it for more than it cost, the amount added on top of the cost price to arrive at the selling price is known as mark-up. It represents the profit margin the seller builds into the selling price, and it can be expressed either as a naira amount or as a percentage of the cost price.

The other options describe different pricing concepts. A rebate is a partial refund given to a buyer after a purchase, often as an incentive or adjustment, and is not simply the gap between cost price and selling price. A discount is a reduction made to the normal selling price at the point of sale, for example for bulk buying or prompt payment, rather than the amount added above the cost price. A commission is a payment made to an agent or salesperson for a service, usually a percentage of the value of a sale, and it is unrelated to the difference between what an item cost the seller and what it is sold for.

Whenever a question asks about the gap between cost price and selling price specifically, the correct term is mark-up, not a reduction, refund, or agent's fee.

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A sole proprietorship is owned and run by one person, so it cannot raise capital by bringing in outside owners or issuing securities to the public in the way a company can. One realistic way a sole trader can raise extra capital is by taking loans from friends, since this simply adds borrowed funds to the business without changing who owns it.

The other options are not available to a sole proprietorship. Issuing debentures and issuing shares are both methods used by registered companies to raise capital from the investing public, and a sole proprietorship has no share capital or company structure to issue these against. Admission of a new member would turn the business into a partnership, which changes its legal form entirely and means it is no longer a sole proprietorship.

Examination reminder: whenever a question asks about raising capital for a sole proprietorship, rule out any option that involves shares, debentures, or bringing in new owners, since these require a different, more formal business structure.

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This question tests knowledge of a key concept in organizational management.

Span of control refers specifically to the number of subordinates reporting directly to a supervisor. It measures how many people one manager or supervisor can effectively direct, coordinate, and monitor at the same time. A narrow span of control means a supervisor oversees only a few people directly, while a wide span means the supervisor is responsible for many people at once, which can affect how closely each subordinate can be supervised.

The other options describe different management ideas. The authority of the supervisor refers to the power or right the supervisor has to make decisions and give instructions, not the number of people under them. The qualification possessed by the supervisor concerns the supervisor's own training, skills, or credentials, which is unrelated to how many subordinates report to them. The number of staff in the whole organization refers to the total workforce across every level and department, which is a much broader figure than the number of people reporting to one specific supervisor.

Whenever a question defines span of control, focus on the direct reporting relationship between one supervisor and the subordinates under that particular supervisor, not the organization's total staff strength or the supervisor's personal authority or qualifications.

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Open market operations are a key tool a central bank uses to control the amount of money circulating in an economy. The bank buys or sells government securities to member banks and the public, and each direction has an opposite effect on the money supply.

When the central bank sells securities, buyers pay for them with cash or bank deposits, and that money flows out of the banking system into the central bank. This withdraws money from circulation, so the purpose of selling securities is to reduce the amount of cash available in the economy.

The reverse action, buying securities, injects money back into the economy by paying sellers, which increases cash in circulation. A change in interest rates can follow from these actions, but the direct and immediate purpose of the sale itself is the reduction of cash in circulation, not the interest rate as such.

Exam takeaway: link central bank selling securities directly to money leaving the economy, and central bank buying securities to money entering the economy.

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This question tests the distinction between visible and invisible items of international trade.

Visible trade involves the exchange of physical, tangible goods that can be seen, touched, and recorded as they cross a country's border, such as textiles, machinery, and oil. Invisible trade, by contrast, involves the exchange of services rather than physical items; nothing tangible crosses the border, yet money still changes hands in payment for the service rendered. Shipping is a service, the carriage of goods or passengers by sea, and because a service rather than a physical commodity is being paid for, it is classified as an invisible item of trade.

Textile, machinery, and oil are all physical commodities that can be loaded, transported, and physically delivered across borders, which makes each of them a visible item of trade rather than an invisible one. The key difference is that visible trade can be counted and recorded as actual units of goods moving through customs, while invisible trade, such as shipping, banking, insurance, and tourism, involves a service being paid for without any physical good changing hands.

Whenever a question lists a service, such as shipping, banking, or insurance, alongside physical goods, remember that the service is the invisible item, since only tangible goods count as visible trade.

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A cheque is an instruction to a bank to pay a stated sum of money. Cheques are classified as open or crossed based on how they can be paid. An open cheque has no crossing lines drawn across its face, which means the person holding it can walk into the bank and collect the money over the counter in cash. A crossed cheque, by contrast, has two parallel lines drawn across it and must be paid into a bank account rather than cashed directly, which makes it safer if the cheque is lost or stolen.

The other descriptions do not define an open cheque. A cheque with no name written on the payee line is a bearer cheque, not necessarily an open one. A cheque with no amount filled in is simply an incomplete or blank cheque, which is not valid for payment. Writing the amount only in figures (without also writing it in words) is a drafting error that a bank may reject, not a classification of cheque type.

Examination reminder: remember the direct link between 'open' and 'cashed over the counter' - it is the opposite safety feature of a crossed cheque.

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Insurance companies must charge policyholders a fair price, called a premium, for the cover they provide. Setting that price correctly requires statistical calculations based on the probability of a loss occurring, such as the chance of death, fire, or accident, and the likely size of any claim.

The professional trained in these statistical and mathematical calculations, who determines premiums and reserves for an insurance company, is an actuary. Their work ensures the company charges enough in premiums to cover expected claims while remaining fair to customers.

An assessor evaluates the value of a loss after a claim is made, an underwriter decides whether to accept a particular risk and on what terms, and a broker acts as a middleman who helps clients find suitable insurance. None of these roles is specifically responsible for the statistical calculation of premiums, which is the actuary's specialised task.

Keep the roles distinct: the actuary calculates premiums using statistics, the underwriter accepts or rejects risk, and the assessor values claims after a loss.

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The cost of goods sold represents the total amount spent to get an item ready for sale, which includes both the price paid to acquire it and any further cost needed to make it saleable, such as repair or reconditioning.

1. Purchase price of the bicycle: \( \text{₦}20{,}000 \)
2. Repair cost: \( \text{₦}5{,}000 \)
3. Cost of goods sold: \( \text{₦}20{,}000 + \text{₦}5{,}000 = \text{₦}25{,}000 \)

Because the bicycle could not have been resold profitably without the repair, the repair cost is treated as part of what it took to bring the goods to a saleable condition, so it is added to the purchase price to give a total cost of goods sold of \( \text{₦}25{,}000 \).

Taking only the purchase price of \( \text{₦}20{,}000 \) ignores the repair cost that was necessary before sale, while using the selling price of \( \text{₦}30{,}000 \) confuses revenue with cost; these two figures answer different questions from the one asked here.

Whenever a question describes an item bought and then improved or repaired before sale, add the improvement cost to the purchase price to find the true cost of goods sold.

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A counter offer is a new offer made in response to an original offer, usually changing one or more of its terms, such as the price or quantity. Making a counter offer automatically cancels or terminates the original offer, because it is treated in law as a rejection of that offer combined with a fresh proposal of the counter offer's own terms. The original offeror is no longer bound by their first offer once a counter offer has been made; they must decide whether to accept the new terms instead.

The other terms do not describe this situation. An invalid offer is one that fails to meet the legal requirements of a valid offer from the start, rather than one terminated by a later response. A void contract is an agreement that has no legal effect at all, which is a different concept from an offer being replaced before any contract is even formed. A quasi contract is an obligation the law imposes even though no real contract exists, again unrelated to the process of offer and counter offer.

Examination reminder: remember that a counter offer does two things at once: it kills the original offer and creates a brand new one that the original offeror can accept or reject.

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Turnover refers to the total value of sales a business makes within a given period, usually a year. It measures how much revenue passes through the business from selling its goods or services, before any costs are deducted.

Turnover is different from the other terms. Purchases are the goods or raw materials the business buys in, which is the opposite side of the trading activity from sales. Assets are the resources the business owns, such as equipment, stock, or cash, and reflect what the business has at a point in time rather than what it has sold. Profit is what remains after all costs and expenses have been subtracted from sales revenue, so a business can have a high turnover but low or even negative profit if its costs are high.

Examination reminder: do not confuse turnover with profit. Turnover is the total sales figure; profit is turnover minus costs.

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Comparative cost advantage is the economic reason countries engage in international trade. It states that a country should specialise in producing and exporting the goods it can make at a relatively lower opportunity cost compared to other goods, even if it is not the most efficient producer of everything, and then trade with other countries for goods that they can produce at a relatively lower cost. This specialisation and exchange allows all trading countries to end up with more total goods than if each tried to produce everything itself.

The other options describe outcomes or measurements related to trade, not the reason it happens. Balance of payment and balance of trade are both records that measure the money flowing in and out of a country from its trade and other transactions; they describe the results of trade, not why it takes place. Absolute cost advantage exists when one country can produce a good more efficiently than another in absolute terms, but it is comparative cost advantage, not absolute advantage, that fully explains why trade remains beneficial even when one country could produce everything more efficiently than its trading partner.

Examination reminder: comparative advantage is about relative opportunity cost between goods within a country, not simply about which country is better overall; this distinction is what separates it from absolute advantage.

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Goods traded in an economy are grouped according to who uses them next. A producer good (also called a capital good) is one used by a business to make other goods or services, such as machinery, raw materials, or tools. A consumer good is one that goes directly to the final user for personal satisfaction, such as food, clothing, or furniture. Because every good produced in an economy ends up either feeding into further production or being consumed directly by households, this producer-and-consumer split is the standard broad classification used in commerce.

The other groupings mentioned are narrower distinctions within consumer goods rather than the general classification of all goods. Saleable and non-saleable goods is not a recognised commerce classification. Inferior and superior goods describes how demand for a good changes with income, and luxurious and essential goods describes how necessary a good is to a consumer; both apply only within the consumer-goods category, not to goods as a whole.

Examination reminder: when a question asks for the broadest way goods are classified, look for the option that could include every type of good in the economy, not one that only describes a subset of consumer goods.

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This question tests knowledge of the resources needed to produce goods and services, which are traditionally grouped into land, labour, capital, and entrepreneur.

Labour refers to the human effort, physical or mental, applied in production, while the entrepreneur is the person who organizes the other resources, takes business risks, and makes key decisions to bring production about. Because both labour and the entrepreneur belong to this same group of essential production resources, they are correctly classified together as factors of production.

The other options describe different concepts. Primary production refers to the extraction or gathering of raw materials directly from nature, such as farming, mining, or fishing, which is a stage of production rather than a resource used in production. Direct services are personal services rendered directly to consumers, such as those provided by doctors or teachers, which is also unrelated to the classification of labour and the entrepreneur. Division of labour describes how a production process is broken into smaller specialized tasks performed by different workers, which is a method of organizing labour, not a category that labour and entrepreneur both belong to.

Whenever land, labour, capital, or the entrepreneur are grouped together in a question, the correct classification is factors of production.

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Posters, free samples, and window displays are all methods used to promote goods and encourage customers to buy them: posters and window displays catch the eye and draw attention to a product, while free samples let customers try a product before committing to buy it. All three are active, outward-facing ways of increasing sales.

Hoarding of goods means deliberately withholding stock from the market, often to create artificial scarcity or to wait for prices to rise. Rather than encouraging sales, it restricts supply and can even work against customers, so it does not belong with the sales promotion techniques.

This is why the group is: posters, free samples, and window display, all of which promote a product, and hoarding of goods, which is an unrelated and even undesirable business practice concerned with withholding stock.

When an exam asks which item does not belong to a group, check whether every other item shares one clear purpose; here, three items promote sales while the remaining one restricts supply.

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This question tests knowledge of the comparative advantages of different modes of transport used in commerce.

Rail transport is able to carry very large and bulky loads in a single trip using wagons linked together, which spreads the running cost of the journey over a much greater quantity of goods. This is what makes the cost per unit of goods carried by rail relatively low compared with the other common modes, especially over long distances and for heavy or bulky commodities.

Air transport is the fastest mode available, but it is also the most expensive because of high fuel consumption and limited cargo capacity relative to cost, making its cost per unit high rather than low. Road transport offers flexibility and door-to-door delivery, but vehicles can only carry comparatively small loads at a time, so the cost per unit tends to be higher than rail for large-scale movement of goods, especially over long distances. Pipeline transport is very efficient, but it is restricted to liquids and gases, such as crude oil or water, and cannot be used to convey ordinary manufactured or general goods at all.

When a question asks which mode of transport is generally cheapest per unit for moving large quantities of goods, rail is the standard answer because of the economies of scale that come from moving many wagon-loads together.

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Different trade organisations exist to represent different interests. Consumers' associations protect buyers, trade unions protect the interests of workers in negotiations over pay and conditions, and employers' associations represent employers on labour and industrial matters.

An organisation whose members are the producers of goods, formed to promote and safeguard the interests of manufacturers, is a manufacturers association. Part of promoting those interests is helping members improve the quality of what they produce, which the association does by gathering and circulating research findings on production methods, materials, and standards among its member firms.

A consumers' association would instead push for quality from the buyer's side, and a trade union or employers' association is focused on labour relations rather than on product research and quality improvement among producers. None of these three groups exists specifically to circulate production research among manufacturers.

When a question links research information and quality of products to an association, think of the organisation representing the producers themselves, the manufacturers association.

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A contract is a legally binding agreement between two or more parties that is enforceable in law. For a valid contract to exist, certain essential elements must be present:

• Offer - one party proposes terms to another.
• Acceptance - the other party agrees to those terms unconditionally.
• Consideration - something of value is exchanged between the parties (money, goods, services, or a promise).
• Intention to create legal relations - both parties intend the agreement to be legally binding.
• Capacity - the parties must be legally competent (of legal age and sound mind).

An offer, acceptance, and consideration are all individual elements that together help form a contract, but none of them alone constitutes an enforceable agreement. It is only when these elements combine that a contract - an agreement enforceable in law - comes into existence.

If any essential element is missing, the agreement may be void or voidable and cannot be enforced in a court of law.

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This question tests knowledge of consumer protection law and its purpose within commerce.

Legislation aimed at protecting consumers is designed to prevent sellers from misleading buyers about the goods and services they offer, for example by giving a false description of the quantity, quality, fitness, or origin of a product. The Trade Description Act exists specifically for this purpose; it makes it an offence for a trader to apply a false or misleading description to goods that are being sold, giving buyers legal protection against deception.

The other pieces of legislation regulate different areas of commercial life. The Partnership Act governs the formation, rights, and duties of partners running a business together, not the protection of the people who buy from that business. The Law of Contract sets out the general rules for when an agreement becomes legally binding between any two parties, and it is not focused specifically on consumers. The Company's Act regulates the formation, registration, and internal governance of companies, again without a specific consumer protection focus.

When a question asks specifically about protecting buyers from false claims about goods, look for legislation with "trade description" or similar consumer-facing wording in its name, rather than laws that govern how businesses are formed or structured internally.

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This question tests understanding of the nature of the relationship between an agent and a principal, using the specific case of an agent of necessity.

An agent of necessity is someone who, faced with an emergency, acts on behalf of a principal to protect the principal's property or interests even without prior instruction to do so, for example a carrier who sells perishable goods that would otherwise spoil in transit. Because the agent is acting without direct supervision and without a fresh, specific instruction covering the emergency, the principal has to rely entirely on the agent to act honestly and in the principal's best interest. This is why the duty of an agent of necessity to the principal is based on trust: the principal trusts the agent to use good judgment and act faithfully even when circumstances have not been explicitly negotiated or agreed in advance.

Negotiation and mutual agreement describe how ordinary contracts or instructions are normally settled between two parties, but an agent of necessity typically has to act before there is time for any negotiation or fresh agreement with the principal. Ability refers to the agent's competence or skill in carrying out a task, which is important but is not what the duty owed to the principal is founded on; the duty exists because the principal is placing confidence in the agent, not merely because the agent is capable.

Whenever a question describes an agent acting on behalf of someone without direct instruction, remember that this kind of relationship rests on trust, since the principal cannot supervise or negotiate every action in real time.

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In a limited company, voting power at meetings is normally tied to the number of shares a person owns, so a shareholder with more shares has more say than one with fewer shares. This is different in organisations that are built around equal membership rather than capital contribution.

A co-operative society is founded on the principle of democratic control, where every member has an equal say in decisions regardless of how much money or how many shares they have contributed. This is why each member of a co-operative society is entitled to exactly one vote, no matter the size of their holding.

In a partnership, voting rights usually follow the partnership agreement and capital contributions, in a limited company voting follows shareholding, and in a public corporation decisions are made by government-appointed boards rather than by a one-member-one-vote system. None of these gives every member an automatically equal vote in the way a co-operative society does.

Remember the co-operative principle as "one member, one vote": it is the feature that distinguishes co-operative societies from profit-driven, capital-weighted organisations.

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An insurance company that accepts a large or unusually risky policy may not want to carry the whole of that risk itself, in case a claim turns out to be very large. To protect itself, the company can pass part of the risk it has already accepted on to another insurance company.

This practice of one insurance company transferring part of a risk it has already undertaken to another insurance company is called re-insurance. It spreads the potential loss across more than one insurer, so no single company is left exposed to the full cost of a major claim.

Under insurance and over insurance describe a mismatch between the sum insured and the true value of the property being insured, not a transfer of risk between insurers. Group insurance is a single policy covering many people together, such as employees of one company, which is also unrelated to shifting risk from one insurer to another.

Whenever a question describes risk moving from one insurance company to another after it has already been accepted, the correct term is re-insurance.

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Privatization is the transfer of ownership and control of a business from the government to private individuals or companies. Governments privatize enterprises such as airlines, telecommunications firms, or refineries when they want to reduce public spending, improve efficiency, or raise revenue by selling shares or assets to private investors.

The other terms describe related but different processes. Commercialisation means running a government-owned business on profit-making, commercial lines while ownership stays with the government. Deregulation means removing government rules and restrictions that control how a market or industry operates, without necessarily transferring ownership. Nationalization is the opposite of the process described in the question: it is when the government takes over ownership of a privately owned business.

Examination reminder: the key word that separates these terms is who ends up owning the business. If ownership moves from government to private hands, the answer is privatization; if it moves the other way, it is nationalization.

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This question is testing knowledge of the functions of management, which include planning, organizing, staffing, directing, and controlling.

The management function that specifically involves recruiting, selecting, training, and assigning employees to the positions that best suit their skills is called staffing. It is the process of ensuring that the right people occupy the right roles within the organization, so that each job is performed by someone with the appropriate qualification and ability.

The remaining options describe other management functions. Planning involves setting the organization's objectives and deciding in advance the actions needed to achieve them, before any positions are filled. Directing involves guiding, supervising, and instructing employees who are already in their roles so that they carry out their tasks properly. Motivating is the act of encouraging and inspiring employees to perform well, which happens after staffing has placed them in their jobs.

Whenever a question mentions matching people to positions based on suitability, the correct management function is staffing, not directing or planning, which deal with instruction and goal-setting rather than placement.

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When shares are sold, the seller and buyer must agree on whether the buyer or the seller keeps the right to the next dividend payment. A share sold cum div (Latin for 'with dividend') is priced so that the buyer, as the new owner, will receive the upcoming, already-declared dividend when it is paid out. The price of a cum div share is therefore slightly higher than it would otherwise be, because it includes the value of that pending dividend.

The opposite situation is described by ex-div, where the share is sold without the right to the next dividend, meaning the original seller keeps that payment instead. A share sold at par describes a share sold at its original face value, and a share sold at a discount describes one sold below its face value; neither of these terms relates to who receives a pending dividend.

Examination reminder: remember that 'cum' means 'with' in Latin, so cum div literally means the buyer receives the dividend with the share purchase.

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Marine insurance can be arranged to cover different interests connected with a sea voyage: the vessel itself, the goods it carries, or the risks of the specific journey. Each of these can be insured separately, so it matters exactly which interest a particular policy protects.

A policy that covers only the physical structure of the vessel, that is, the ship's hull and machinery, against loss or damage is called hull insurance. It protects the ship owner's investment in the vessel itself, not the goods being transported.

Cargo insurance instead protects the goods being carried on the ship, which is a different interest from the vessel. Voyage insurance and haulage insurance are broader or unrelated terms that do not specifically single out the ship's own body as the object of cover.

When a marine insurance question specifically mentions "the ship itself" or "the body of the vessel," the correct term to reach for is hull insurance, as distinct from cargo insurance for the goods on board.

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This question is testing an understanding of how banks protect themselves when granting a loan.

When a bank lends money, it usually asks the borrower to pledge something valuable that the bank can hold or claim if the borrower fails to repay the loan. This item is called a collateral security. In this case, Mr Ojo deposited his life insurance certificate with the bank as the item of value backing the N54,000 loan; if he defaults on repayment, the bank has a legal claim against the value of that certificate.

The certificate cannot be a current asset of the bank, because a current asset is something the bank already owns and expects to convert to cash in its normal course of business; the certificate still belongs to Mr Ojo and is only held as security. It is not an interest charged, because interest is the cost of borrowing the money, expressed as an amount or percentage, not a physical document. It is also not a loan repayment, since repayment refers to Mr Ojo paying back the borrowed sum over time, which is a separate matter from the certificate deposited at the start of the loan.

Whenever a question describes an item pledged to secure a loan, rather than the loan amount, the interest, or the repayment itself, the correct term is collateral security.

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This question tests knowledge of the specific functions carried out by the ports authority, as distinct from the functions of other agencies that also operate at seaports.

The ports authority is responsible for developing and running port facilities that support the movement and temporary storage of cargo passing through the port. Among its core functions is providing warehousing services, meaning it builds and manages sheds, silos, and storage areas where imported or exported goods can be kept safely while they await clearance, onward transport, or collection by owners.

The remaining options belong to other agencies rather than the ports authority. Collecting import duties and checking the activities of smugglers are functions carried out by the customs service, whose job is to assess and collect government revenue on goods crossing the border and to prevent the illegal movement of goods. Enforcing general law and order in harbours falls to the police and other security agencies operating at the port, not to the ports authority itself, whose role is essentially the commercial and operational management of port facilities.

When a question lists port-related duties, separate the ports authority's role, providing physical infrastructure and services like warehousing, berthing, and cargo handling, from the customs and security functions of duty collection, anti-smuggling checks, and policing.

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A certificate of incorporation is the legal document issued by the relevant government body confirming that a company has been registered and now exists as a separate legal person. Once a public company receives this certificate, it becomes a distinct legal entity, meaning its assets and liabilities exist separately from those of its individual members (shareholders). This separation is what protects shareholders' personal property from the company's debts, since the company itself, not its members personally, owns its assets and owes its debts.

The other statements are inaccurate for a public company at this stage. Incorporation does not stop a company from suing or being sued; on the contrary, becoming a separate legal person is precisely what allows it to sue and be sued in its own name. Incorporation does not automatically make it difficult to raise capital; in fact, a public company's separate legal status and limited liability make it easier to attract investors. Finally, a public company generally needs an additional document, the certificate of trading (or certificate to commence business), before it can actually start trading; the certificate of incorporation alone does not permit it to begin business operations.

Examination reminder: separate legal personality, giving the company its own identity distinct from its owners, is the single most important consequence of incorporation and is frequently tested.

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This question tests knowledge of the elements that can affect whether a contract is validly and fairly formed.

When one party makes a statement that is not true, and does so with the aim of persuading the other party to enter into a contract, that false statement is called misrepresentation. It induces the other party to agree to the contract on the basis of information that does not reflect the true facts, and depending on whether the false statement was made knowingly or carelessly, it may make the resulting contract voidable.

The other terms describe different requirements for a valid contract. Consensus ad idem refers to both parties genuinely agreeing to the same terms, a meeting of minds, which is a general requirement for any contract rather than a description of a false inducing statement. Legal capacity refers to whether a party is legally allowed to enter into a contract at all, for example being of sound mind and of contractual age, which has nothing to do with the truth of any statement made. Consideration is the value, money, goods, or a promise, that each party gives in exchange for the other's promise, and it is unrelated to whether a statement made during negotiation was true or false.

Whenever a question describes a false statement used specifically to induce someone into a contract, the correct term is misrepresentation, not the general contract requirements of agreement, capacity, or consideration.

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A wholesaler buys goods in bulk from producers and stores them until retailers need them. This storage function, warehousing, lets the wholesaler buy large quantities when supply is plentiful and prices are low, and release the goods gradually to retailers over time, even during periods when the goods are scarce.

By holding stock in this way, the wholesaler evens out the gap between times of oversupply and times of shortage, which stops prices from swinging sharply up during scarce periods or crashing during gluts. This smoothing effect is exactly what stabilizing prices means.

Provision of credit helps retailers manage cash flow, advice to retailers passes on product knowledge, and financing supports retailers' purchases, but none of these functions directly controls how much of a good is available in the market at a given time, which is what actually keeps prices stable.

When a commerce question links a wholesaler's function to price stability, think first of warehousing, because storage is the mechanism that regulates supply over time.

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Producers use several distinct techniques to help their goods sell well. Labelling attaches information about a product, such as its ingredients or usage instructions, and branding gives a product a distinctive name or symbol that sets it apart from competitors' goods.

The activity of wrapping or containing goods so that they become attractive to look at and convenient to carry, store, and use is packaging. Good packaging protects the product while also making it more appealing and easier to handle from the factory through to the final consumer.

Labelling only supplies information rather than physically making a product easier to handle, and branding is about identity and recognition rather than physical attractiveness or ease of handling. Merchandising covers the broader in-store presentation and promotion of goods, but it is not the specific act of making an individual product's container attractive and manageable.

When a question focuses on a good's container being attractive and easy to handle, the term being tested is packaging, distinct from the informational role of labelling or the identity role of branding.

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Governments impose different kinds of duties depending on where goods are produced. Duties on goods brought into the country from abroad are import duties, while duties on goods sent out of the country are handled through export drawback arrangements. Neither of these applies to goods made and sold entirely within the country.

Taxes charged on goods that are manufactured locally, inside the country's own borders, are excise duties. They are collected from local producers, usually at the point of manufacture, and raise revenue while sometimes also discouraging excessive consumption of certain goods such as alcohol and tobacco.

Ad valorem duties describe how a tax is calculated, as a percentage of the value of the goods, rather than where the goods come from, so it is a method of charging, not a category tied to local production. Export drawback actually refunds duties already paid, which is the opposite of imposing a new tax.

Focus on the origin of the goods when this type of question appears: local production points to excise duties, while goods crossing the border in point to import duties.

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Average stock is a simple way of estimating the typical level of goods a trader held throughout a trading period, using only the stock levels at the very start and the very end of that period.

1. Opening stock: \( D2{,}000 \)
2. Closing stock: \( D3{,}000 \)
3. Average stock: \( \dfrac{D2{,}000 + D3{,}000}{2} = \dfrac{D5{,}000}{2} = D2{,}500 \)

Notice that turnover of \( D36{,}000 \) and purchases of \( D28{,}000 \) are not needed for this particular calculation; they would be relevant if the question asked for rate of stock turnover instead, but average stock depends only on the opening and closing stock figures.

A common error is to add the opening and closing stock but forget to divide by two, which would give \( D5{,}000 \), the total rather than the average; another error is picking one of the two figures alone instead of combining them.

Whenever a question gives an opening and a closing stock figure and asks for the average, add the two figures and divide by two.

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This question tests knowledge of the barriers to trade among West African countries.

West African countries use different national currencies, such as the naira, the cedi, and the CFA franc, and many of these currencies are not freely convertible or widely accepted outside their own countries. This means that a trader in one country often struggles to pay for goods bought from another country without going through cumbersome currency exchange processes. This problem, the lack of an acceptable medium of exchange across the sub-region, is one of the major factors that hinders commercial activities among West African countries, since money is central to every exchange of goods and services.

The other options do not represent genuine hindrances in the way the question implies. A nationalization decree could restrict trade in a specific country during a specific period, but it is not a general, recurring hindrance across the whole sub-region. Good road networks and having many commercial banks would actually help, rather than hinder, trade, since better roads ease the movement of goods and more banks improve access to financial services; describing them as hindrances would be inconsistent with their real economic effect.

When a question asks what obstructs trade specifically, look for the option describing an actual barrier, not something that is generally a facilitator of trade dressed up as a hindrance.

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A public enterprise is a business owned and controlled by the government, set up to provide essential goods or services rather than to maximise profit for private shareholders. Because there are no private shareholders contributing share capital, the government itself supplies the bulk of the money the enterprise needs to start up and to keep running.

This funding usually comes in the form of grants, subventions, and subsidies voted for the enterprise in the national or state budget. The government may top this up with loans, but the day-to-day and capital funding of most public enterprises depends mainly on these government grants, which is why they are financed mainly by government grants.

Commercial banks and the World Bank can lend money to a public enterprise, but a loan is a debt that must be repaid with interest, so it is not the main or most reliable source of funding. There are also no shareholders in a public enterprise, since it is not owned through shares, so financing by shareholders does not apply here.

Remember that the presence or absence of shareholders is the quickest way to separate a public enterprise from a public limited company: a public enterprise belongs to the state and leans on state funding, while a limited company raises capital from shareholders.

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In shipping, a charterer who hires a ship agrees to pay for the space on board, and problems can arise either when the charterer fails to provide enough cargo to fill that space, or when the ship is delayed at port beyond the agreed loading or unloading time.

When a charterer does not supply enough cargo to fill the space they hired on a ship, they must still pay the ship owner for the unused space, and this charge is called dead freight. It compensates the ship owner for revenue lost because part of the ship's capacity was booked but left empty.

Demurrage is charged when a ship is kept waiting at port beyond the agreed time, which is a delay charge rather than a charge for unused cargo space. Dock dues are fees paid for using port facilities, and a penalty is a general term for a punitive charge, neither of which specifically describes payment for unused ship space.

Distinguish the two shipping charges this way: dead freight is for space booked but not filled with cargo, while demurrage is for time lost through delay at port.