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Lesson Objectives All students will understand Most students will

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Presentation on theme: "Lesson Objectives All students will understand Most students will"— Presentation transcript:

1 Lesson Objectives All students will understand Most students will
The role of banks in our economy Most students will Understand the importance of unlimited liability Some students will Understand the complexities of risk Progress Arrow

2 Risk https://www.youtube.com/watch?v=U2lv9oa-1lo
Discussion points pg 77 Consider issues raised in this video

3 Risk Banks have to understand the risks involved before offering a loan (risk being the possibility of things not turning out as planned or predicted) Banks use a range of strategies to minimise the risk Quantify the risk where possible Credit history of borrower Spread the risk Lots of customers, some safe some risky, in a range of markets and countries There is a trade off between risk and safety Entrepreneurs are risk takers Bankers are not risk takers but realise there are higher profits attached to risky loans

4 Sole Trader/Partnership
Theory Notes Sole Trader/Partnership Only owner of the business/2-20 owners Have “unlimited liability” so responsible for all debts Creates risk for owner Beauchamps High School

5 Private/Public Limited Company
Theory Notes The owners of the company are shareholders Private Limited Company shareholders are invited to invest (friends/family) Public Limited Companies are listed on stock exchange and shared can be purchased by general public. Shareholders have Limited liability which means the personal finances of shareholders are completely separate from those of the company Shareholders of a company are not personally liable for the debts of the company Most they can lose is the value of their investment in shares

6 Lets search an LTD in the area
ickford+gas

7 Task Consider the advantages and disadvantages of a sole trader over a private limited company

8 Private Limited Company Sole Trader/Partnership
Differences between private limited companies and sole traders/Partnerships Theory Notes Private Limited Company Sole Trader/Partnership Liability Limited Liability Unlimited Liability Risk Less risky – only lose share value More risky – could lose business and personal assets Control Less control– shared with shareholders More control– only owners have all control Profits Less profits – shared with shareholders - dividends More profit – owners get all profits Privacy Less privacy – accounts have to be shared More privacy – no-one has right to see accounts Progress Arrow Beauchamps High School

9 Task If you were starting up your own business, would you set up as a Sole Trader or Ltd? Explain why

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