JAMB Commerce 2005 Past Questions & Answers

A floating policy is a type of marine insurance policy. It is designed for businesses that frequently ship goods, covering all shipments up to an agreed value over a period, without needing to specify the exact ship for each journey in advance. Because it primarily deals with covering goods during sea transport, it is a classic example of marine insurance.

Common mistake: Students might be confused by the term 'actuaries', selecting it because it sounds technical, but actuaries are professionals who calculate insurance risks, not a type of insurance policy.

The main purpose of insurance is to provide a way for people and businesses to manage risk. By paying a small, regular amount called a premium, the insured person transfers the financial risk of a potential loss, like from a fire or accident, to the insurance company. This means the most important benefit is the protection and financial security it offers against unforeseen events.

Common mistake: Students might mistakenly choose option C, believing insurance always provides full compensation, but the principle of indemnity means you are only restored to your original financial position, not allowed to profit from the loss.

The keyboard is an input device because it is used to enter or 'put in' data and instructions into the computer for processing. When you type letters, numbers, or commands, you are sending information into the system. Devices that show you results, like a monitor or printer, are called output devices because they bring information 'out' of the system.

Common mistake: Students might mistakenly choose 'Output unit' because they see the letters they type appear on the screen, confusing the action of typing (input) with the result displayed on the monitor (output).

The correct option is 1964. The Lake Chad Basin Commission (LCBC) was established on May 22, 1964, by the four countries bordering Lake Chad: Nigeria, Niger, Chad, and Cameroon. This organization was created to manage the shared water resources and promote regional economic cooperation and integration, which are key aspects of foreign trade.

Common mistake: Students may confuse the formation date of the LCBC with that of other regional bodies like ECOWAS (formed in 1975), making the 1974 option seem like a plausible but incorrect guess.

Privatisation is the process of transferring ownership of a government-owned business (public corporation) to the private sector. A major disadvantage of this policy is that the government loses direct control over these enterprises. Once sold, the government can no longer use these companies to directly influence prices, employment, or strategic national interests, as the new private owners will primarily focus on making a profit.

Common mistake: Students often mistakenly choose option A, but a private-sector-led economy is the intended goal of privatisation, not necessarily a disadvantage from the policy's point of view.

Job security is the most important right because it provides the employee with a sense of stability and peace of mind. When a worker feels secure in their job, they are more likely to be motivated, loyal, and focused on performing their duties effectively without the constant fear of being dismissed unfairly.

Common mistake: Students often mistakenly choose 'regular emoluments' because salary is a very obvious and important reward for work, but job security provides the fundamental stability needed to perform the work effectively in the first place.

Air pollution is considered the most dangerous because it directly affects the air we breathe, which is essential for life. Harmful gases and particles from industries and vehicles can quickly spread over large areas, causing severe respiratory illnesses, heart diseases, and even cancer. Unlike other forms of pollution, it is very difficult to avoid exposure to polluted air.

Common mistake: Students may mistakenly choose water pollution because it is also very harmful, but air pollution's direct impact on breathing makes it more immediately life-threatening to a wider population.

The question is about the laws that protect consumers. The primary purpose of these laws is to ensure that consumers are treated fairly, receive good quality products, and are not exploited by sellers, which all leads to maximum satisfaction. These laws cover issues like product safety, fair pricing, and honest advertising to protect the buyer's interests.

Common mistake: Students often mistakenly think the goal is just about getting cheap prices, but consumer protection is focused on ensuring fair value and safety for money spent, not just the lowest cost.

The amount of compensation an insured person can receive is directly linked to the premium they have paid. A higher premium usually means the item is insured for a higher value, which in turn means the potential compensation in the event of a loss will also be higher. This is a fundamental principle that ensures the payout is fair and proportional to the level of cover purchased.

Common mistake: Students might incorrectly choose 'risk suffered' because a loss must occur to get a payout, but they forget that the amount of compensation is limited by the value insured, which is directly linked to the premium paid.

A hybrid computer is a special machine that combines the features of both analogue and digital computers. The digital part of a hybrid computer is what processes discrete numbers (like 0 and 1) and performs precise mathematical calculations, which is what the question describes. Because a hybrid computer contains this digital functionality along with analogue capabilities, it is considered the correct answer for a system that can perform these calculations.

Common mistake: Many students mistakenly choose 'digital' because the question provides the exact definition of a digital computer, but they may not realize that a hybrid computer also incorporates these digital functions as part of its combined system.

Commercialization is the process of making government-owned corporations operate like private businesses, with the main goal of making a profit. When these public corporations start to focus on profit, they enter the market and compete directly with existing private companies for customers. This action increases the number of players in the market, which leads to a higher level of competition among all business operators.

Common mistake: Students might mistakenly choose option D, thinking that government involvement always increases social responsibility, but commercialization actually prioritizes profit-making which can sometimes reduce the focus on social welfare goals.

Personal selling is a key element of the marketing promotion mix that involves a salesperson meeting directly with a potential customer. The main goal is to persuade the customer to make a purchase through direct, two-way conversation. Unlike sales promotion which uses incentives like free gifts, personal selling's defining feature is this face-to-face communication.

Common mistake: Students may mistakenly choose options A or D because they are also forms of promotion, but they fail to recognize that these are impersonal methods, unlike the direct, face-to-face nature of personal selling.

In an organization, communication that flows from a higher level of authority to a lower level is called downward communication. A superior, like a manager, is at a higher level, while a subordinate, like an employee, is at a lower level. Therefore, when a superior gives instructions or feedback to a subordinate, it is an example of downward communication.

Common mistake: Students often confuse this with upward communication, which is the opposite flow of information from a subordinate to a superior, such as submitting a report or giving feedback to a manager.

A procedure is an established or official way of doing something, which involves a series of detailed, step-by-step instructions for carrying out a routine task in an office. The question asks for the name of this 'step-by-step method,' which is the exact definition of a procedure. For example, there is a specific procedure for how an employee should apply for annual leave or how to process a customer's order.

Common mistake: Students often mistakenly choose 'policy', but a policy is a general rule or guideline, not the specific step-by-step instructions for a task, which is a procedure.

The telegraph is the correct answer because it is a system for sending text-based (unwritten) messages over long distances. Using a teleprinter network, which evolved from the telegraph, a single message could be typed and transmitted simultaneously to multiple branches connected to the network. This made it an efficient tool for internal business communication before modern internet-based systems.

Common mistake: Students might mistakenly choose the telephone because it's a familiar communication tool, but it is primarily used for spoken messages, not unwritten ones, and is less efficient for broadcasting to many branches at once.

Inter-departmental communication refers to the exchange of information between different departments within the same organization. The correct media for this are internal tools like memoranda (memos), circulars, and the telephone. These methods are used to pass instructions, share information, and coordinate activities inside the business. Advertising, on the other hand, is a form of external communication used to reach customers, not for internal messages.

Common mistake: Students might mistakenly choose an option with 'advertisement', forgetting that advertising is a form of external communication meant for customers, not for internal messages between departments.

The Second-tier Foreign Exchange Market (SFEM) was a market in Nigeria that dealt with foreign currency and also allowed for the trading of securities to attract foreign investment. A stock represents a share of ownership in a company and is a type of security that is bought and sold on organised markets like a stock exchange. Therefore, stocks were one of the key instruments traded in the SFEM to encourage investment.

Common mistake: Students may be confused by the term 'foreign exchange' and incorrectly choose travellers' cheque or money order, thinking the question is about methods of sending money abroad.

Packaging is the specific marketing term for the process of designing and creating the container or wrapper for a product. This includes both the physical container that holds the product and the graphic design on it, which helps to protect the item and attract customers. Therefore, developing a container and graphic design for a product is the definition of packaging.

Common mistake: Students might mistakenly choose 'promotion' because packaging is used to attract customers, but 'packaging' is the specific term for the activity of creating the product's container and design.

A carrier is the correct legal and commercial term for a business whose main purpose is to transport goods or people from one place to another for a fee. This service is a crucial aid to trade because it helps to move raw materials to factories and finished goods to consumers. For example, a shipping company, an airline, or a trucking firm are all types of carriers.

Common mistake: Students might mistakenly choose 'transporter' because it is a common word, but 'carrier' is the more specific legal and commercial term used in commerce for a firm that undertakes the business of transportation.

For tourism to thrive in a location, certain essential factors must be present. Good weather and attractive scenery are natural attractions that draw visitors. Accessibility ensures that tourists can easily travel to the destination, while amenities refer to the necessary facilities like hotels, restaurants, and entertainment that cater to their needs during their stay.

Common mistake: Students may mistakenly choose options that include 'capital' or 'schools', but while capital is needed to develop infrastructure, it is not a direct factor that attracts tourists, unlike good weather or scenery.

The question refers to 'GIF' contracts, which is a common typo for CIF (Cost, Insurance, and Freight) contracts used in foreign trade. In a CIF contract, risk passes to the buyer once the goods are loaded on the ship. The signing of the shipping manifest is the official confirmation by the ship's master that the goods are on board, which is a necessary step before the Bill of Lading (the document of title) is issued. This question identifies the signing of the manifest as the key legal event that confirms the shipment, thereby triggering the process for the transfer of property.

Common mistake: Many students may choose option C, as the actual transfer of shipping documents is the standard point where property passes, but this question focuses on the preceding official act of the manifest being signed.

Bankruptcy is a legal declaration that a person or business cannot pay its debts. According to the Partnership Act, the bankruptcy of any partner is a specific event that automatically leads to the dissolution of the partnership. This is because the partnership's assets must be used to settle the liabilities. While other issues like losses or disagreements can lead to dissolution, bankruptcy is a legal trigger that forces it.

Common mistake: Students might mistakenly choose 'misunderstanding between partners' because disagreements are common, but unlike bankruptcy, they do not automatically and legally dissolve the partnership by law.

Unlimited liability is a major disadvantage for a sole proprietor. It means that the owner is personally responsible for all the debts of the business. If the business fails and owes money, the owner's personal properties like their house or car can be sold to pay back the debt because the law does not separate the owner from the business.

Common mistake: Students might mistakenly choose 'limited liability' because they confuse it with 'unlimited liability', not remembering that limited liability is actually an advantage found in limited liability companies.

The main purpose of production is to create goods and services that can satisfy human wants. This ability of a product to satisfy a want is called utility. Therefore, creating utility is the most important concept because if a product is not useful, it has no value and there is no point in producing it.

Common mistake: Students often mistakenly choose 'transformation' because production involves changing raw materials, but this transformation is only meaningful if it creates utility or usefulness.

In a merger or acquisition, the company that is being bought (the acquired firm) gives up its assets and control. In return, it must receive some form of payment or compensation. The term 'grant' is used in this context to mean the compensation that is 'granted' or given to the acquired firm in exchange for its business, which can be in the form of cash or shares.

Common mistake: Students often choose 'share' because mergers frequently involve an exchange of company shares, but they forget that the payment can also be made entirely in cash, so shares are not *always* received.