JAMB Commerce Past Questions & Answers - Page 121

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Open-market operations refer to the purchase and sale of securities in the open market by a central bank. It is done to control the flow of money in the economy. When there is excess money in circulation, the central bank buys securities in the open market by raising interest rates so that people will be willing to exchange their monies (for high interest in return) for a particular period of time.

In the same way, if it wants to increase the flow of money in the economy, the central bank sells securities to the market by lowering the interest that will be paid on the instruments (debt instruments). With this, people will be willing to buy (borrow money) from the central and pay back with low interest.

A risk-free asset is one that has a certain future return no possibility of loss. A good example of a risk-free security is the treasury bill.

A treasury bill is a short-term debt instrument, usually with a maturity period of 3 months. It is issued on behalf of the federal government by the central bank to borrow money from the masses.

Jobber's turn is the difference between the price at which a jobber on the stock exchange market is prepared to buy a share and the price at which the jobber is prepared to sell.

Money as a measure of value allows the values of different goods and services to be compared, also referred to as a unit of value. For instance, the value of gold and that of silver is determined by the value of money placed on it.