ࡱ> %` 'bjbjNN ,,R&&&&rrrTJJJJLJ_2L(:L(bLbLbLSSSv_x_x_x_x_x_x_$)ahc_rjT1SSjTjT_&&bLbL_UUUjTj&bLrbLv_UjTv_UU:V[,^r[bLL JTj[ [_0_[.d>U@d[dr[ SSU T TSSSS__~U^SSS_jTjTjTjT3J:J:&&&&&&  Principles of Business and Finance 6200/6600 Essential Standard# Objective #Unit Titles/Essential Standards and Objective StatementLocal UseCourse WeightUnit BPrinciples of BusinessEssential Standard 5.00Understand business credit and risk management.19%PBF5.01Understand credit management.12%PBF5.02Understand risk management and insurance. 7% Essential Standard 5.00 will help students understand how businesses use credit and manage risk management. In objective 5.01 students will learn about the main types of credit, the advantages and disadvantages of businesses using credit, the main factors included in calculating the cost of using credit, how creditors determine to whom to grant credit, credit documents commonly used, how credit regulations protect the rights of credit applicants and users, and lastly assistance with credit problems. In objective 5.02 students will understand the types of risks, how businesses handle risk of loss, why businesses buy insurance, and which uninsurable risks businesses may encounter. UNPACKED CONTENT Credit is the use of someone elses money for a specified period of time. Businesses, the government, and individuals use credit to buy goods and services. The main types of credit are: Charge accounts Credit cards Installment credit Consumer loans There are advantages and disadvantages of businesses using credit. Common advantages of businesses using credit are: Establishing favorable credit rates Keeping business separate from personal expenses Minimizing record-keeping and receipts Keeping track of what employees are spending Earning rewards Common disadvantages for businesses using credit are: Experiencing theft of customer records/databases Overbuying by employees Overusing credit Using credit has a cost. Calculating the cost of credit includes several factors. The factors are: Interest Simple Installment Maturity date Annual percentage rate Creditors examine several factors about potential debtors when deciding whether to grant them credit. The main factors examined for granting credit are: The three Cs of credit are: Character Capacity Capital Credit application Documentation of credit data Information provided by credit bureaus Checking loan features and credit activities for errors minimize potential credit problems. Two commonly used credit documents that assist with minimizing credit problems are: Credit contract Statement of account Regulations exist to protect rights of credit applicants and rights of credit users from fraudulent and unfair practices. Regulations to protect credit rights during the credit application process are: Truth-in-Lending Law Equal Credit Opportunity Act Regulations to protect credit rights while using credit are: Fair Credit Billing Act Fair Credit Reporting Act Consumer Credit Reporting Reform Act Fair Debt Collections Act Credit Card Accountability, Responsibility, and Disclosure Act Credit assistance options are available to minimize or eliminate credit problems of credit users. Credit assistance available are: Debt repayment plan Credit counseling Bankruptcy Name: ______________________ Class: _______ Date: _______ Main Types of Credit Organizer Directions: Summarize the main types of credit and include key term(s) listed at the bottom of this sheet. Give examples when possible in the spaces provided.  Type  Details Examples    Key Terms: trade credit, loan credit, sales credit, finance charge, down payment, installment loan, promissory note, collateral, cosigner Name: ______________________ Class: _______ Date: _______ Credit: Primary or Promoter Product Activity Directions: Complete the chart using advertisements that include credit offers to businesses, the government, and individuals. AdvertisementType of credit offeredIs credit the primary product or is it used to promote the sale of goods and services?1  HYPERLINK "http://www.staples.com" www.staples.com Credit Cards: Business and personalUsed to promote the sale of goods or services 2  3  4  5  6  7  8   Name: ______________________ Class: _______ Date: _______ Advantages and Disadvantages of Using Credit Organizer Directions: Summarize common advantages and disadvantage of businesses using credit. Include key term(s) listed at the bottom of the sheet and examples when possible. AdvantagesDisadvantages  Key Terms: credit rating Name: ______________________ Class: _______ Date: _______ Cost of Credit Organizer Directions: In your own words, respond to the questions in the spaces provided. 1. What factors are included to compute interest? ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 2. How is simple interest calculated? ________________________________________________________________________________________________________________________________________________________________________________________________ 3. How is time determined for a loan for each of the provided lengths? Years ________________________________________________________________________________________________________________________________ Months ________________________________________________________________________________________________________________________________ Days ________________________________________________________________________________________________________________________________ 4. How is a maturity date calculated? ________________________________________________________________________________________________________________________________ ________________________________________________________________ 5. How is a decreasing loan payment calculated? ________________________________________________________________________________________________________________________________________________________________________________________________ 6. What is disclosed in APR? ________________________________________________________________________________________________________________________________________________________________________________________________ Name_____________________________ Class__________ Date___________ Main Factors for Granting Credit and Credit Documents Organizer Directions: Describe the listed factors examined for granting credit and credit documents in the spaces provided. Include key term(s) listed at the bottom of the sheet. Section:A SHAPE \* MERGEFORMAT  Key term(s): credit bureau Main Factors for Granting Credit and Credit Documents Organizer Continued Section B Directions: Describe the listed credit documents.       Course6200/6600 Principles of Business and FinanceUnit BPrinciples of FinanceEssential Standard5.00B219%Understand business credit and risk management.Objective5.01B212%Understand credit management.Essential Questions What are the main types of credit? What are some advantages and disadvantages of businesses using credit? What main factors are included in calculating cost of credit? How do creditors determine to whom to grant credit? What are the commonly used credit documents? How do credit regulations protect the rights of credit applicants and users? 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