TARLAC CHRISTIAN COLLEGE

5085 Buno Matatalaib, Tarlac City

STUDY TO SHEW THYSELF APPROVED UNTO GOD,
A workman that needeth not to be ashamed, rightly dividing the word of
truth. (II Timothy 2:15)

Name: CRISTEL ANN L. DOTIMAS Score:

Course/Year: BSA-2 Date:
Performance Task (Week 6)
Chapter 4 – Credit Instruments
II. Review Questions

1. What is a credit instrument?

 A credit instrument is like an "I owe you" note. It's a promise to pay back money you
borrow. Imagine you need $100. A credit instrument would say, "I promise to pay back $100
by June 1st." It's a way to get money now and pay it back later.
2. What are the characteristics of credit instruments?
 Credit instruments have a few parts. First, they say how much money is borrowed. Then,
they talk about when the money needs to be paid back. Sometimes, they also mention how
much extra money (interest) needs to be paid. They also say who is borrowing and who is
lending the money.
3. What are some of the functions of credit instruments?
 Credit instruments help people and businesses get money when they need it. They also help
move money around. For example, if you need to buy something from another country, a
credit instrument can help you pay for it.
4. What are the two classifications of credit instruments?
 Credit instruments are classified as negotiable or non-negotiable. Negotiable means they can
be transferred to someone else. Non-negotiable means they can't be transferred.
5. What are the kinds of bonds?
 Bonds are like loans you give to companies or governments. There are different types of
bonds. Some are from companies (corporate bonds), and others are from governments
(government bonds).
6. What are the advantages of bonds?
 Bonds can give you regular payments, like interest. They are often seen as safer than stocks
because if a company goes broke, bondholders get paid before stockholders.
7. What are the kinds of stocks?
 Stocks are like owning a piece of a company. There are common stocks, which let you vote
on company decisions, and preferred stocks, which give you priority in getting paid.
8. What are commercial credit instruments?
 Commercial credit instruments are used in business deals. They include things like bills of
exchange and promissory notes.
9. What is a cheque?
 A cheque is a written order to a bank to pay someone a certain amount of money from your
account.
10. What are the kinds of cheques?
 There are two main types of cheques: bearer cheques, which anyone can cash, and order
cheques, which are only for specific people.
11. What are the types of bills of exchange?
 Bills of exchange are like IOUs used in trade or for loans. There are different types, like
trade bills and accommodation bills.
12. How are credit instruments negotiated?
 Credit instruments can be transferred by signing them over to someone else or by giving
them to someone else.