Advanced level 2025 South West mock commerce and finance 3
Advanced level 2025 South West mock commerce and finance 3
Question One
CORPORATE SECURITIES
m
is based on the number of shares actually issued and the
amounf a company of capital gives *information received andabout noUhe an^investment alue of &oftattf authorized ‘0 the shares general . The public fundamental for subscription document. of It
must state the number of shares the corporation is authorized to f?sue– This document also sets forth
the par value of the shares issued by the company. Ordinary shares are fundamental securities into
which the proprietary interest of a corporation is divided. By virtue of their possession, such security
holders are endowed with a number of rights.
Companies usually issue more shares when the need for more capital arises. These shares may be
issued to existing shareholders by granting them options to purchase the shares at favourable prices.
The company may also offer debt or other classes of securities that have the privilege cf being
converted.
Work Required:
a) Give the name of the fundamental incorporating document used in the passage and briefly
explain two basic clauses not mentioned in the passage that this document usually contain. (5marks)
Shares may be sold above or below par value as suggested by the passage. Explain this
| statement and outline three factors that may cause the share value to be above the par. | (5marks) |
| c) | According to the passage, ordinary shareholders are endowed with a number of rights. |
| Identify and explain two of such rights? | . |
| shares may be issued to existing shareholders in proportion to their old share ’’more |
d ) |
| holdings” Explain two possibly way through which this can be done. Question Two |
(5marks) |
b)
INSURANCE
Insurance exists to protect us against unpredictable expenses. We insure our cars, homes, our health
and our valuables. All these can be categorized into four branches of insurance; namely, fire, marine,
life and accident insurance. Each branch is made up of a host or types of insurance products. Under
an insurance contract, a party indemnifies the other party against a specified amount of loss,
occurring from specified eventualities within a specified period, provided a fee is paid. This is
guided by some cardinal principles. Some of the principles are more applicable at the time of the
contract while others have more emphasis when the risk occurs.
In some branches of insurance, compensation is normally proportionate to the loss incurred, whereas
in one particular branch, usually a fixed sum is paid in disrespect of one of the key principles of
insurance. Some types of insurance are an essential component of risk management, and are
mandatory in several countries. Without insurance coverage, the private commercial sector’would be
unable to function and has very important effects upon the economy of the country.
Work Required:
a) What other name is referred to the fees paid as mentioned in the nassatm? Pvnioi„ u •* •
relevant in Insurance contracts. ^ ® ^ Explain why it is
b) Briefly explain the Insurance principles that apply at the rime • • (4marks)
contracts? PP y hme of enteruig into insurance
c) One branch of insurance as mentioned in the passage does rmt „ , (Sharks)
dinsurance ) State . State fourthe reasons branchwhy andyou the principle agree with in the questfon passage and
| that insurance • (5marks> & insurance has very important effects (6marks) |
upon the economy of the country. |
