a) Explain the following types of discount:
- Trade discount;
- Quantity discount;
- Cash discount;
- Seasonal discount.
b) State five functions of a development bank.
Explanation
a) Trade discount: is a reduction in the catalog price of a commodity given to retailers to enable them to take profit.
Quantity discount: is a reduction in price based on the volume of goods purchased by a retailer.
Cash discount: is a reduction in the debt payable by a retailer who pays before the due date.
Seasonal discount: is a reduction in price to buyers who order and pay for goods during and off-seasons.
b) The key function of a development bank are:
- Investment advise and conducting feasibility studies;
- Management of projects;
- Provision of equity capital and underwriting security issue
- Undertaking of research.
- Reasons for referring to the Central Bank as a Banker to government