Financial Management is a study of planning, designing, directing and managing the economic activities such as the utilization of capital and acquisition of.
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This document contains 53 multiple choice questions related to finance and taxation. The questions cover topics such as financial objectives, ratios, working.
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Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprise. It means applying general management principles to financial resources of the enterprise.
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CAPM: Ke = Rf + β(Rm − Rf)
Beta effect: higher β increases the risk premium β(Rm−Rf), so required return rises.
Flow: β ↑ → risk premium ↑ → Ke ↑
Profit maximisation vs wealth maximisation:
Hence, wealth maximisation is preferred for long-term value creation.
MCC is the cost of raising one additional rupee of new capital. It is relevant for evaluating new projects.
Flow: New funds needed → source changes → cost changes → MCC differs
Use MCC when assessing incremental financing; WACC gives a broad benchmark.