Chapter 1

Question 1

is an area of financial decision making harmonizing individual motives and enterprise goals

Answer 1

Financial Management

Question 2

it is mainly concerned with the effective fund management in business

Answer 2

Financial Management

Question 3

deals with the procurement of funds and their effective utilization in the business as an application of general managerial principles in financial decision making

Answer 3

Financial Management

Question 4

the art and science of managing money

Answer 4

finance

Question 5

study of how to make good decisions that involve money

Answer 5

finance

Question 6

functions of finance

Answer 6

analysis
decision making

Question 7

areas of finance

Answer 7

corporate finance
personal finance
investment and portfolio management
financial markets and institutions
public finance

Question 8

it is how a firm should make good financial decision

Answer 8

corporate finance

Question 9

it is how an individual should make good financial decisions

Answer 9

personal finance

Question 10

it is how we should make good decisions involving financial managements

Answer 10

investments and portfolio management

Question 11

it is about how the financial markets should be organized and how financial institutions should be managed in such a way that they provide the most benefit to the economy

Answer 11

financial markets and institution

Question 12

it is about taxes, spending, balancing the budget, and financing public debt

Answer 12

public finance

Question 13

importance of financial management

Answer 13

financial planning
acquisition of funds
proper use of funds
financial decision
improve profitability
increase the value of the firm
promoting savings

Question 14

scope of financial management

Answer 14

economics
accounting
mathematics
production management
marketing
human resource

Question 15

financial economics is one of the emerging areas which provides immense opportunity to finance and economical areas

Answer 15

economics

Question 16

accounting records the financial information of the business

Answer 16

accounting

Question 17

modern approaches of the financial management applied large number of mathematical and statistical tools and techniques

Answer 17

mathematics

Question 18

mathematics is also called

Answer 18

econometrics

Question 19

it is the operational part of the business which helps to multiply the money into profit

Answer 19

production management

Question 20

produced goods are sold in the market with innovative and modern approaches

Answer 20

marketing

Question 21

it provides manpower to all the functional areas of the management

Answer 21

human resource

Question 22

functional areas of modern financial management

Answer 22

determing financial needs
choosing the sources of funds
financial analysis and interpretation
Cost-Volume-Profit analysis
working capital management
divideng policy
capital budgeting

Question 23

financial manager should determine the financial needs of the business

Answer 23

determining financial needs

Question 24

institution that can provide long term funds

Answer 24

choosing the sources of funds

Question 25

profitability, liquidity, short term and long term financial position of the business

Answer 25

financial analysis and interpretation

Question 26

fixed costs, variable costs, and semi variable costs have to be analyzed

Answer 26

cost volume profit analysis

Question 27

part of the firms capital which is required for financing short term assets such as cash, receivables and inventories

Answer 27

working capital management

Question 28

estimating the financial viability of capital investment over the life of investment

Answer 28

capital budgeting

Question 29

organization of finance functions

Answer 29

investment decisions financing decisions dividend decisions

Question 30

it relates to the selection of assets in which funds are invested by the firm

Answer 30

investment decisions

Question 31

two categories of investment decisions

Answer 31

long term assets short term assets

Question 32

yield a return over a period of time in the future

Answer 32

long term assets

Question 33

convertible into cash in the normal course of business, usually within a year

Answer 33

short term assets

Question 34

decisions as to how to raise the funds to pay for investment in assets

Answer 34

financing decisions

Question 35

two categories of financing decisions

Answer 35

capital structure theory capital structure decisions

Question 36

decisions as to how much, how frequently, and in what form to return cash to owners

Answer 36

dividend decisions

Question 37

objectives of financial market

Answer 37

profit maximization wealth maximization

Question 38

it aims at maximizing the profit of the business

Answer 38

Profit maximization

Question 39

Certain drawbacks of profit maximization

Answer 39

it ignores the time value of money or the timing of returns it ignores risk it is vague and it ignores cash flows available to stockholders profit manipulation

Question 40

one of the modern approaches that involves the latest innovations and improvements in the business

Answer 40

wealth maximization

Question 41

it is also known as the value maximization or net present worth maximization

Answer 41

wealth maximization

Question 42

is forward looking and based on cash flows

Answer 42

financial management

Question 43

historic in nature and focuses on profit rather than cash

Answer 43

financial accounting

Question 44

concerned with raising funds and providing a return to investors

Answer 44

financial management

Question 45

primarily concerned with a provision of information for management to assist it in making decisions within the company

Answer 45

management accounting