2 Lecture - Objectives of financial management, financial assets and financial markets

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MGT201

Midterm & Final Term Short Notes

Objectives of financial management, financial assets and financial markets

The objectives of financial management are to maximize shareholder wealth and ensure long-term financial viability. Financial assets are instruments that represent ownership or debt in an entity, such as stocks, bonds, and real estate. Financial


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Midterm & Finalterm Prepration
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  1. What are the primary objectives of financial management? a. Maximizing market share and revenue b. Maximizing shareholder wealth and long-term financial viability c. Maximizing employee satisfaction and productivity d. Minimizing production costs and maximizing profits Answer: b

  2. Which of the following is NOT an example of a financial asset? a. Real estate b. Stocks c. Bonds d. Inventory Answer: d

  3. Financial markets are platforms where buyers and sellers trade which of the following? a. Financial assets b. Physical assets c. Services d. All of the above Answer: a

  4. The ownership of which financial asset represents ownership in a company? a. Stocks b. Bonds c. Real estate d. All of the above Answer: a

  5. Which of the following is NOT a characteristic of financial assets? a. They are easily transferable. b. They have a high degree of liquidity. c. They have a low degree of risk. d. They have the potential for high returns. Answer: c

  6. Which financial market specializes in the buying and selling of government-issued bonds? a. Stock market b. Bond market c. Real estate market d. Commodities market Answer: b

  7. Which of the following is NOT a factor that affects financial asset prices in financial markets? a. Economic conditions b. Political instability c. Company size d. Interest rates Answer: c

  8. What is the main goal of a shareholder when investing in financial assets? a. To receive a high level of interest payments b. To receive a guaranteed return on investment c. To make a profit by selling the asset at a higher price d. To have a long-term ownership stake in the company Answer: c

  9. Which financial asset represents a debt owed by a company or government entity? a. Stocks b. Bonds c. Real estate d. Commodities Answer: b

  10. Which of the following is NOT a function of financial markets? a. Providing a platform for companies to raise capital b. Facilitating the buying and selling of financial assets c. Setting interest rates for loans and mortgages d. Providing a means for investors to diversify their portfolios Answer: c



Subjective Short Notes
Midterm & Finalterm Prepration
Past papers included

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  1. What is the primary objective of financial management? Answer: The primary objective of financial management is to maximize shareholder wealth and ensure long-term financial viability.

  2. What are financial assets? Answer: Financial assets are instruments that represent ownership or debt in an entity, such as stocks, bonds, and real estate.

  3. What are the different types of financial assets? Answer: The different types of financial assets include stocks, bonds, derivatives, and real estate.

  4. What is a financial market? Answer: A financial market is a platform where buyers and sellers trade financial assets, such as stock exchanges and bond markets.

  5. What factors affect financial asset prices in financial markets? Answer: Economic conditions, political instability, interest rates, and company performance are some of the factors that affect financial asset prices in financial markets.

  6. What is the difference between stocks and bonds? Answer: Stocks represent ownership in a company, while bonds represent a debt owed by a company or government entity.

  7. What are the characteristics of financial assets? Answer: Financial assets have a high degree of liquidity, are easily transferable, have the potential for high returns, and are subject to varying degrees of risk.

  8. What are the functions of financial markets? Answer: Financial markets provide a platform for companies to raise capital, facilitate the buying and selling of financial assets, and provide a means for investors to diversify their portfolios.

  9. Why is understanding financial markets important for effective financial management? Answer: Understanding financial markets is important for effective financial management as it enables informed investment decisions that align with business objectives and risk tolerance.

  10. What are the risks associated with investing in financial assets? Answer: The risks associated with investing in financial assets include market risk, credit risk, liquidity risk, and inflation risk.

Financial management is the process of managing an organization's financial resources to achieve its objectives. The primary objectives of financial management are to maximize shareholder wealth and ensure long-term financial viability. To achieve these objectives, financial managers need to have a deep understanding of financial assets and financial markets. Financial assets are instruments that represent ownership or debt in an entity. Stocks, bonds, and real estate are examples of financial assets. Financial markets are platforms where buyers and sellers trade financial assets. The stock exchange, bond market, and commodities market are examples of financial markets. Effective financial management requires a deep understanding of financial assets and financial markets to make informed investment decisions that align with business objectives and risk tolerance. Financial managers need to understand the characteristics of different financial assets, such as liquidity, transferability, potential returns, and risks. They also need to keep track of economic conditions, political instability, interest rates, and company performance, as these factors affect financial asset prices in financial markets. Investing in financial assets carries risks, such as market risk, credit risk, liquidity risk, and inflation risk. Financial managers need to be aware of these risks and manage them effectively to ensure long-term financial viability. Financial markets also play a crucial role in providing a platform for companies to raise capital, facilitating the buying and selling of financial assets, and providing a means for investors to diversify their portfolios. In conclusion, effective financial management requires a deep understanding of financial assets and financial markets. Financial managers need to make informed investment decisions that align with business objectives and risk tolerance, manage risks effectively, and keep track of economic conditions, political instability, interest rates, and company performance. Financial markets play a crucial role in providing a platform for companies to raise capital, facilitating the buying and selling of financial assets, and providing a means for investors to diversify their portfolios.

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