at Universität Paderborn | Flashcards & Summaries

Flashcards and summaries for banking&finance at the Universität Paderborn

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Store of value while inflation

➢ inflation and deflation changes the measuring stick making it difficult to compare costs and benefits of some options

➢ when money uses wealth invest in paintings, properties, gold, land, shares

➢ any item people consider as a way of holding wealth is a store of value

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4 functions of money

1. medium of exchange

o trade for goods and services

2. unit of account

o have an understanding for money and know the value

3. store of value (= standard of value)

o convenient form in which to store wealth

o asset function of money

4. means of different payment

o lend and borrow money and give back later

o money as a credit

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Bartering

→ the act of trading one good or service for another, without the exchange of money

→ goods and services are exchanged immediately

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advantages of bartering

- good for times when cash is not readily available but goods and services are
- beneficial when you barter something you already have enough of for something you need
- mutually-beneficial process
- double coincidence of wants

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disadvantages of money

- inefficient

- can't guarantee fair exchange

- goods are not an unit of account

- money makes trading easier

- becomes a measuring stick of value

(aka standard of value)

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money as store of value

“people are willinging to hold large amounts of money when it is a good store of value, but try to hold small accounts when its not beneficial”

- any item considered a way to hold on wealth is a store of value

- inflations and deflation change the measuring stick = difficult to compare costs and benefits

Exemplary flashcards for banking&finance at the Universität Paderborn on StudySmarter:

How do banks make money?

• give credit / issue credit

• lends money to people / government / banks

• deposits money

➢ transforms it into loans

➢ loan rate higher than deposit rate

• fees

➢ late payment fees

➢ ATM fees

➢ interchange fees

➢ penalty fees

➢ overdraft fees (when you go in the minus)

➢ installment fees

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Venture capital

capital invested in a project in which there is a substantial element of risk, typically a new or expanding business.

• all companies need funds of one kind or another in order to succeed

• require capital investment in order to acquire fixed assets or to expand

• working capital is required to pay bills and staff costs

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external finance for small businesses

• borrowing from friends or family

• securing a loan or an overdraft from a bank

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external finance for bigger companies

• equity finance (because shareholders have ‘ownership’ of or ‘equity’ in the company to the value of their shares + company does well, shareholders will receive their share of the profits)

→ issuing new shares and selling them to existing owners or on the stock exchange

• debt finance → borrow money by issuing bonds, the value of which has to be paid back to the individuals who buy the bonds

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Equity finance

method of raising capital by selling company stock to investors
-in return for the investment, the shareholders receive ownership interests in the company

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venture capitalist

= private people or companies

• earn money through providing capital for business ventures – i.e. their business involves investing in other businesses

• small businesses have profited from crowdfunding

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banking&finance at Universität Paderborn

Flashcards and summaries for banking&finance at the Universität Paderborn

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Bank Financial Statements at

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E10 banking & finance at

Banking and Financial Institutions at

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banking&finance at Universität Paderborn

Flashcards and summaries for banking&finance at the Universität Paderborn

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Bank Financial Statements at

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Banking and Financial Institutions at

Finance at

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