Finance and Market Management Principles Quiz
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Questions and Answers

According to Principle 1 of Financial Management, what is the relationship between risk and expected return?

  • Higher risk does not affect the expected return
  • Risk and expected return are not related
  • The higher the risk, the lower the expected return
  • The more risk, the higher the expected return (correct)

    • What is the main focus of financial management?

  • Understanding the concept of corporate world and financial statements
  • Achieving the goals of the organization through efficient management of money (correct)
  • Organizing and directing financial activities of the organization
  • Managing the market and finance function

    • What is the role of financial managers?

  • Efficient and effective management of money to achieve organizational goals (correct)
  • Planning and organizing financial activities
  • Controlling the financial activities of the organization
  • Understanding the concept of time value of money and financial statements

    • In financial management, what does the term 'time value of money' refer to?

    <p>The idea that money available today is worth more than the same amount in the future</p> Signup and view all the answers

    What do financial ratios help in analyzing?

    <p>Financial performance and position of an organization</p> Signup and view all the answers

    According to Principle 2, why is a dollar received today worth more than a dollar received in the future?

    <p>Due to the opportunity to earn interest on money received today</p> Signup and view all the answers

    In principle 4, what is the incremental cash flow?

    <p>The difference between the projected cash flows if the project is selected and if it is not selected</p> Signup and view all the answers

    What does Principle 6 imply about efficient capital markets?

    <p>The values of all assets at any instant fully reflect all available information</p> Signup and view all the answers

    What is the primary concern addressed in Principle 9?

    <p>The difficulty in measuring a project's or an asset's risk</p> Signup and view all the answers

    In financial decision making according to Principle 10, what forms the basis for personal judgments about ethical behavior?

    <p>Each person's own set of values</p> Signup and view all the answers

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