Topic 1: Introduction to Business Finance

Question 1

What is finance

Answer 1

study of acquisition and investment of fund

purpose of enhancing value and wealth

Question 2

What are the two areas of finance?

Answer 2

financial services

managerial finance

Question 3

What are the key activities of the financial manager

Answer 3

perform financial analysis and planning
making investment decisions
making financing decisions

Question 4

What is the goal of a financial manager?

Answer 4

make decisions
take actions
maximise shareholder’s wealth
by maximising share price

Question 5

What are the returns of a shareholder?

Answer 5

dividends

capital gains

Question 6

What are the reasons why profit maximisation fails?

Answer 6

timing of cash flows
cash flows available to shareholders
risk