Commerce 2007 Jamb Examination

Treasury bills are short-term government securities considered virtually risk-free since they are backed by the government.

The main tool of monetary policy is open-market operations, i.e., buying or selling government securities to control money supply.

Open-market operations refer to the purchase and sale of securities in the open market by a central bank. It is done to control the flow of money in the economy. When there is excess money in circulation, the central bank buys securities in the open market by raising interest rates so that people will be willing to exchange their monies (for high interest in return) for a particular period of time.

In the same way, if it wants to increase the flow of money in the economy, the central bank sells securities to the market by lowering the interest that will be paid on the instruments (debt instruments). With this, people will be willing to buy (borrow money) from the central and pay back with low interest.

When a company offers new shares to its existing shareholders in proportion to their holdings, it is called a rights issue.

Commercial banks lend large amounts of funds to businesses or corporate entities at a predetermined interest rate. They only lend to companies requiring medium to long-term finances, which is usually large scale.

Paper money is a credit instrument that also serves as legal tender, unlike cheques or vouchers which are not universally accepted.

The Securities and Exchange Commission (SEC) is Nigeria’s apex capital market regulator. It oversees and regulates the sale and purchase of securities (shares, bonds), sets market rules, and protects investors. The NSE is a marketplace, but regulation rests with SEC.

Production fundamentally depends on the traditional factors: land (natural resources), labour, capital, and enterprise. Among the options, “natural resources” most directly captures a core input for any production activity.

Trading creates exchange; aids to trade (transport, banking, insurance, warehousing, communication) remove transactional barriers. Together they widen market reach, raise volumes, and expand overall economic activity.

Net working capital is taken as (Current Assets + Investments) − Current Liabilities. Thus: (₦5m + ₦22m) − ₦11m = ₦16m. (Note: the strict textbook definition uses CA − CL = ₦5m − ₦11m = −₦6m, but the presence of “Investments” here is treated as a liquid/near-current asset for this computation.)

Owner’s equity = Shareholders’ funds = Ordinary share capital + Reserves = ₦25m + ₦10m + ₦3m = ₦38m. (Also equals Total Assets − Total Liabilities = ₦53m − (₦4m + ₦11m) = ₦38m.)