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JAMB Economics 2020 past questions and answers

2 questions. Try each one, then open the answer to check yourself and read the explanation.

Question 21

Financial Institutions

Which of these alternatives is wrong? Central banks are:

  1. A.issuers of bank rates
  2. B.bankers to commercial banks
  3. C.merchant banks
  4. D.bankers to the government
Show the answer and explanation

Answer: C (merchant banks)

Explanation

A central bank sets bank rate and is banker to the government and commercial banks; it is not a merchant bank.

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Question 27

Business Organisations

Which of the followings is not true about debentures?

  1. A.preference shareholders receive their share of profits before debenture holders receive their entitlements
  2. B.debentures holders are creditors to the company and therefore do not share in the risk of the company
  3. C.debentures are fixed interest bearing security with specified maturity
  4. D.debenture holders are entitled to interest payments whether or not profits are made
Show the answer and explanation

Answer: A (preference shareholders receive their share of profits before debenture holders receive their entitlements)

Explanation

Debenture holders are creditors and must be paid interest before any shareholders, including preference shareholders, get dividends. So A is false.

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