Instruments of Exchange

Instruments of Exchange

The Lodge School Business Studies Department

Instruments of exchange are anything that is used to determine VALUE during the exchange of goods and services.

• It enables a transaction to take place .

• It facilitates trade.

Barter

The trading of items or services.

Bill of Exchange

• An unconditional order from one person/organisation (the drawer) to another (the drawee) agreeing to make a payment in the future.

• Sight bills of exchange are paid on presentation.

• Term bills of exchange are paid at a given date in the future.

• It is used frequently in international trade because it gives importers time to sell the before payment is required.

Electronic Funds Transfer (EFT)

• The electronic transfer of money that occur within and across financial institutions through computer based systems. EFT transactions include:

• Credit Cards

• Debit Cards

• Standing Order - specific amount

• Direct Debit - varied amount

• Direct Deposits -salaries

e-Commerce

• The trading of goods and services using online communications. It includes:

• Internet auctions

• Social Media Marketplaces

Tele-banking

• Making banking transactions using a computer network that enables bank customers to use an appropriate type of telephone and the internet to access some services.

• It is useful because it is a 24 hour facility.

• It is also accessible anywhere.

Learning by Inquiry

Together we discussed 5 instruments of exchange previously, it is now your turn to discover the following Instruments of exchange:

*m-Money

*Cheques

*Money Order

*Telegraphic money transfer

*Treasury Bills

*Bank transfer

Be sure to indicate what it is, when it can be used and highlight one advantage and one disadvantage.