35. Why do financial institutions charge the highest interest rates on cDs?

Financial institutions usually charge the highest interest rates, since money may not be withdrawn on demand.

36. What is the difference between money market accounts and money market funds accounts? •Money market accounts are accounts insured by government. They pay a little higher interest than both checking or savings accounts but limit the number of transactions you can make without a fee. Don’t confuse them with money market funds accounts. Money market funds accounts offered by mutual fund companies pay a higher rate of return than savings and checking accounts but are not insured like money market accounts.

37. Why do people keep their money with a bank?

38. What steps should be taken to reach financial goals?

The key to effective money management is time. The more time you are willing to invest in managing your financial affairs, the greater the return on that investment. If you're interested in reaching your financial goals, you have to do more than simply store your money.

BUSINESS ORGANIZATIONS

1. What must be taken into consideration before starting a business organization?

Anyone who wishes to start a business must take into consideration the objectives in setting up a business organization, the amount of capital needed to launch it and the level of control, the business and tax liability of different forms of ownership and expected profits or losses of the business.

2. What are three different ways that a business can be privately owned?

There are essentially three basic ways to set up a privately owned enterprise: a sole proprietorship, a partnership, and a corporation. Each form of business organization has its advantages and disadvantages.

3. What is a sole proprietorship?

A sole proprietorship is an unincorporated business that is owned and operated byone person called a sole proprietor or sole trader. It's the most commonly used form for new small businesses

4. What are the advantages of this form of business organization?

A sole proprietorship is the least costly and easiest form of business organization to launch and operate.A sole proprietorship is a business in which the owner is fully and personally responsible for all the obligations of the enterprise. A sole proprietor is entitled to all the company’s profits and takes complete managerial control.A sole proprietor is free to make any business decision There is preferential tax treatment.

.5. What are the disadvantages of a sole proprietorship? Unlimited liability being the major disadvantage of a sole proprietorship/ Limited resources refer to the owner’s personal financial resources and his or her ability to borrow. A sole proprietorship ends with a sole proprietor’s death.

6. What is a sole proprietor responsible for?

A business owner is personally responsible for the company’s debts. It means that personal assets such as money from his bank account and the proceeds from the sale of his house can be taken to pay liabilities of the business. the owner is fully and personally responsible for all the obligations of the enterprise.

7. What does preferential tax treatment mean?

It means that any profit earned from the business is considered a sole proprietor’s income. The owner pays only personal income taxes on the business’s profits, which are reported as personal income on the proprietor’s individual income tax return.

8. What does unlimited liability mean? 

Unlimited liability being the major disadvantage of a sole proprietorship means that a sole proprietor assumes the burden of any losses or liabilities the enterprise faces. A business owner is personally responsible for the company’s debts. It means that personal assets such as money from his bank account and the proceeds from the sale of his house can be taken to pay liabilities of the business.

9. What is a partnership?

A partnership is an association of two or more persons, who act as co-owners of an unincorporated business and operate it for profit.

10. What does a partnership agreement state? The way a partnership is established, run and taxed often makes it the most attractive form of business. To start a partnership it’s necessary to draw up a partnership agreement stating the terms of the partnership, the rules of how to manage it, each partners’ personal rights and liabilities.

11. What are the advantages of a partnership?

A partnership is relatively easy and inexpensive to establish. There are more possibilities in raising funds because the borrowing power of two or more partners is greater.Each partner can benefit a partnership by his/her knowledge, skills or ideas and specializes in certain activities of the business. Like a sole proprietorship partnerships are subject to special taxtreatment.

12. Are there any advantages of a partnership over a sole proprietorship? What are they?

13. What are the disadvantages of a partnership?

A partnership has unlimited liability and if it is unable to meet its financial obligations, partners have to use their personal assets to pay off all the business’s debts.

Profit sharing can excite controversy when one or more partners aren’t putting great efforts into the management of the business.Disagreements between the partners may cause management conflicts The partnership is terminated because of the withdrawal or death of a partner. If the business is to continue, a new partnership agreement must be drawn up.

14. Why can management conflicts occur? Disagreements between the partners may cause management conflicts. Partners’ different ideas on how to run the company can lead to disagreements that are likely to harm its business activity.