Business Exam

What is Business

Commercial activities which include an individual or group engaging in some sort of financial transaction.

Why do businesses exist?

To fulfill a need or want in the community while making profit off of it.

Difference between a needs and a want.

Needs are goods/services required for surivial, while wants are there to improve and enhance your lifestyle.

Give 3 examples of a need and 3 for wants.

Needs

* Food
* Water
* Shelter’

Wants

* TV
* Luxury car
* A vacation

What is the difference between a trend and a fad?

A trend is something which society consistently follows for a long period of time, while a fad is a short term craze.

What is the order for Maslow Hierachy of needs?

Physiological, safety, social, esteem, than self-actulization

In which tier of maslow’s hierachy would higher education fall under?

Esteem needs

Are durability, impulses, and versatility rational motives?

No they are not, impulses are apart of emotional motives

The law of supply states that when prices go up supply will go down , true or false?

False

What happens in the recession stage?

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1. Employment is high
2. Prices take drop significantly, yet people still struggle to buy
3. Businesses fire more employees and tax revenue goes down

Businesses fire more employees and tax revenue goes down

Does business interdependence refer to a business relying on another to help them with their own business?

Yes

What do you call a business that makes a product?

Manufacturer

What do you call goods that businesses buy from other business to help them in the production of their own?

Producer goods

What is a marketplace (give an example)

Buying and selling of products occurs Including producer and consumers (sephora)

Difference between products and goods

Products are ready and provided by a business whereas a good is something that is being made (goods can be products)

Difference between a consumer and customer?

A consumer is someone who just uses products whereas a customer is someone who buys something from a particular store

What is the difference between direct and indirect competition?

Direct is comp between products are practically identical while indirect is between products/services that aren’t directly elated bu fulfill the same need.

What is pricing power?

Business have this and it’s being able to charge higher when cost goes up.

Economic systems are….

The way of dealing with the selection, production, distribution, and consumption of goods and services in society.

How many types of economic resources are there and what are they

There are 3 nd they are natural, human, and capital

What is a small scale business give an example

Local/provincial organization which can be for profit or not however it employs less than 500 people (La Marca Salon)

Describe the prosperity stage of the economic cycle

* People have money
* Expensive things are being bought
* The economy is booming

Describe the inflation stage of the economic cycle

* Price of goods increase more than incomes
* Workers demand more money yet it isn’t affordable
* Prices for prodcution input raises

Describe the recession stage of the economic cycle

* Entire economy slows down and businesses don’t create as much wealth
* Many indiviuals are layed off
* Demand drops along with prices
* People are buying second hand

Describe the depression stage of the economic cycle

* A really severe and long lasting recession
* Unemployment is at an all time high
* People only buy essentials
* Companies start producing less products

Describe the recovery stage of the economic cycle

* people's income starts to rise slowly
* businesses start to replace their goods
* companies start hiring again

What is demand and what is supply?

__**Demand**__ is the quanity of goods/services that the **market** is willing to **buy**, __**supply**__ is the quanity of goods/services that **producers** and **sellers** are willing to **provide to consumers**

What is the equilibrium price?

The price at which a business should sell their products are because it works out well between both supply and demand

What is gross domestic product

The total value of all goods and services produced in a country over one year

Who is an entrepreneur

A person who organizes, operates, and takes a risk for a business venture.

What are the 4 benefits to society from entrepreneurship

Job creation

* Creation of new jobs leads to creation of further new jobs

Political benefits

* Tax gets decreased because more people work

Economic Benefits

* Entrepreneurship brings competition which helps lower prices, additional entrepreneurial opportunities and investment

New ideas

* The generation of new ideas creates additionall new ways of doing things which creates more goods and services

Is the difference between an invention and innovation the fact that one is new knowledge while the other transforms already existing knowledge into something else?

Yes

What is income

The money that an individual or business receives from sources, such as wages or sales, interest, and dividends.

What is a commission

You earn a % of the sales you make

What is disposable income

Take home pay after all necessary deductions have happened (tax, CPP, EI)

What are 4 voluntary deductions

* RRSP
* union fees
* health care benefits
* donations

What are 4 ways to allocate your money

* Spending
* Savings
* investing
* donating

What are the 4 ways to compare when buying something-

* comparing price and quality
* quality can be more important then price
* comparing price and features
* Find the best features in your price range
* services
* delivery/gurantees/warranty
* planning and comparing
* checking reviews to see personal opinions

What does the bank of canada do?

It’s not a charted bank it exists to keep the canadian economy stable by increasing and decreasing the bank rate/prime lending rate

Schedule one banks such as TD or RBC are domestic banks that are allowed to receive, hold, and enforce security interest, true or false?

True

What are 3 forms of credit

Loans, lines of credit, and credit cards

What is credit

Privilege of using someone else’s money for a period of time

Give 3 pros and cons of credit cards

Pros

* businesses get paid faster
* payment is guranteed
* increases the probability and size of consumer purchases

Cons

* additional costs
* transaction fees (2-3%)
* monthly statement charges

Order the following from highest interest rate to lowest: Line of credit, pay day lenders, bank loan, credit cards

Pay day lenders

Bank credit card

Line of credit

Bank Loan

The 3 Cs which determine one’s credit score

Character

* pay bills on time
* how long have you lived at current residence
* job

Capacity

* Permanent job
* Dependents
* Living expenses

Capital

* Savings
* Assets and values

How to calculate simple interest

(Principal amount)(interest rate in decimals)(time which is years)

What is the rate of return

Interest expressed as a % of the orginal investment

Yield/Return

The amount of money earned above the orginal investment

What are the 6 options to save your money

* Savings account
* Term deposit
* GICs
* RRSP
* RESP
* TFSA

What are some examples of investments

* Stocks
* Mutual funds
* Bonds
* Collectibles
* Real estate

How can you see how long it will take you to double your money

Rule of 72 (ONLY WORKS WITH COMPOUND INTEREST) divide the number 72 by your interest rate (not in decimal) per year

A few indicators to look at while looking for which stock is good to invest in

* Volume'
* 52 week high and low
* Good divdends
* Positive revenue growth over the last 5 years

Difference between a bear and bull market

Bear market is when the demand for prices for majority of the stocks are low and bull market is the opposite it’s when the demand for prices for majority of the stocks is high.

What is a common stock

* High risk stocks
* Give the shareholder some influence in the company

What is a preferred stock

* Low risk stocks
* Do not give shareholders any voting rights

What is NASDAQ

Known for high tech and emerging market

What is risk management

Investors knowing what they will do if they get into a risky situation with their stocks

What is a capital loss

When you buy you stocks for a high price and sell them for a low price

What shows you which stock traded most that day

Volume

What tells you whether the price the previous day is higher or lower and by how much

Change

How can you figure out how much of MTRL ($4.75) you can buy with $500.00?

* Divide $500 by the close price
* 500/ 4.75 = 105. 27 -→ You can buy 105 shares

What is a GIC

A way to save where you deposit a fixed amount at a fixed interest rate and time period.

* Very safe
* Low liquidity as you can’t cash out before the time is up
* Low interest rate

What is a mutual fund

A pod off money from investors that is set up and managed by an investment company to buy or sell securities of other corporations

* Safer than stocks but still risky
* Very liquid
* High rate of return

What are 3 other forms of income

gifts

inheritance

investments

Which of the following is most risky stock?

a) blue chip

b) preferred

c) stocks apart of emerging industries

stocks apart of emerging industries

What is a portfolio

A collection of one’s financial assets (investments) like stocks, bonds, etc.

Logo/Trademark

A word/symbol/design and or a combination that a business uses to distinguish its goods or services from others.

Slogan

A short catchy phrase that is usually attached to the company’s name and logo

What are the 4 Ps of marketing

Product

* quality/design/features/uniqueness/benefits

Price

* cost to produce
* supply and demand
* target market and compeition

Place

* channels of distrubution

Promotion

* ways to encourage someone to buy products

The two Cs of marketing

Consumer and Competition

What are 3 channels of distribution

Direct

* A business which sells directly to the consumers (bakeries)

Indirect

* The business sells to an intermediary who then sells the product to another business or consumer, it could be a retailer, importer, or wholesaler (walmart)

Specialty

* Consumer buys from place other than retail store (amazon)

4 factors of target market

Geographics

Psychographics

Behaviour

Demographics

What is P/E

How much you have to pay to get a $1 of earning from a stock

How to calculate capital gain or loss

Add all earning then subtract by the inital investment

What are the 6 functions of HR

* Recruitment
* Selection
* Training
* Compansation/Benefits
* Assesment
* Development

What are the 3 types of training

* Job specific
* Safety (whmis)
* Company procedures and standards

In which assesment are you evaluated by different MANAGERS

* 360
* Top-down
* Matrix

matrix

Is this a legal question: Are you eligible to work in canada

Yes

In this function of HR they are looking for the right employee (advertising, managing responses from applicants, shortlisting, etc)

Recruitment

What is the legal term that an employer can use to justify an employee’s termination

Just Cause

In this form of leadership style quick decision making happens and is best when employees have a lack of knowledge or experince (all decisions are on the leader)

Autocratic

What is production

The functional area responsible for turning inputs into finished outputs through a series of processes

What are the 6 factors of production

* natural resource
* raw material
* labour
* capital
* managment
* information

(on exam be able to take a scenario and place something in each category)

This factor of production involves mental and physical work along with automation with the emerging tech

Labour

What are the 3 constant steps in the production process

* purchasing
* processing
* quality control
* grading

Capital is the money invested into a business sometimes referred to as ___________ capital

monetary

What happens during the decline stage of the product life cycle

* sales decrease
* businesses research their market
* changes in price and more adveritising

What is profit or loss

The amount of money the company makes in a fiscal period

Which financial statements are revenue and expense shown in?

Income statement

What term refers to the net worth of the company on that specific day

Owner’s equity

Cost associated with generating revenue for the compnany is called…

expenses

Things of value owned by the company are

Assets

What are debtors

assets (accounts recievable)

Membership fee is….

revenue

Mortage for the building is….

liability

What are the 5 Ps of international business (explain)

Price

* Cost of producing goods and services can vary and sometimes it’s cheaper to consumer if we reduce production cost by lower foreign wages, taxes, etc

Product

* It allows businesses to have variety

Proximity

* Some businesses benefit from selling in neighboring country’s border rather than their domestic customer

Preference

* Consumers prefer foreign goods due to their reputations and international business offers that

Promotion

* Products can reach further than the domestic market due to technology

What is a trade surplus

When the country is making more money with exports than paying for imports

How are assets and liabilities ordered on a balance sheet

**Assets** are ordered by liquidity and **liabilities** are ordered by the time it would take you to pay them

How are revenue and expenses ordered on an income statement

They are ordered alphabetically

What is a sole proprietorship

A business owned by one person