Page 116 - Accountancy_F5

investor with an expectation of receiving The procedures for
mandated payment schedules of the interest purchasing and selling
income and principal amount, except for financial assets in Tanzania
preference shares. Preference shares do In Tanzania, financial assets are publicly
not have a maturity period; consequently, traded through Dar es salaam Stock
the investor does not expect to get back Exchange (DSE) except government bonds
FOR ONLINE READING ONLY
the principal amount, unless the company which are initially traded through auction
is liquidated. by the Bank of Tanzania (BoT). Thereafter,
LANGUAGE EDITING
Importance of financial the government bonds are registered in the
assets investment in business DSE for secondary market trading. For
LANGUAGE EDITING
undertaking an investor to participate in the DSE, he/
Investment in financial assets is very she is required to have an account with
important in the business operations of both the DSE through the Central Depository
an investor and the issuer. Such importance System (CDS). The account is used to
is summarised as follows to: record the ownership of the stock holdings
and transaction history for buying or selling
An investor: Financial assets provide an shares. The process involved in opening
opportunity to allocate financial resources the CDS accounts slightly differs between
wisely. Instead of holding cash, which individual investors and institutional
does not generate a return, it is better to investors. Individual investors are required
invest. Investments are the source of regular to lodge an application form accompanied by
income.
an individual’s information sheet and a copy
Issuing firms: The government and of an identity card. DSE has also introduced
its institutions: when issuing financial mobile trading whereby investors enter their
assets, it is the sources of funds/capital to registration details, buy shares, sell shares,
finance their operations and development and check the balance of the shares that
projects. Financial assets can be used as a they own among other services by using
macroeconomic stabilising tool through the Unstructured Supplementary Service
monetary policy. The government may Data (USSD) code in selected mobile
decide to issue a bond specifically aiming operators or using the mobile application.
at reducing excessive money supply in the Meanwhile, corporate investors are required
circulation to curb inflation. to fill and submit application forms, copies

Private entities: financial assets are of incorporation certificates, memorandum
the source of capital, which contribute of association, articles of association, and
to financing their operations, project directors’ identity cards. The opening of the
development and the economic development account is free of charge to all investors.
of a country in general.

Student’s Book Form Five
103

23/06/2024 17:35
ACCOUNTANCY_DUMMY_23 JUNE.indd 103
ACCOUNTANCY_DUMMY_23 JUNE.indd 103 23/06/2024 17:35