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प्रश्न
What is corporate finance and state two decisions which are the basis of corporate finance?
उत्तर
Definition:
‘‘corporate finance deals primarily with the acquisition and use of capital by business corporation.’’
Meaning:
The term corporate finance also includes financial planning, study of the capital market, money market and share market. It also covers capital formation and
Two decisions that are the basis of corporate finance.
- Financing Decision: The business firm has access to the capital market to fulfill its financial needs. The firm has multiple choices of sources of financing. The firm can choose whether it wants to raise equity capital or debt capital. Firms can even opt for a bank loan, public deposits, debentures, etc. to raise funds. The finance manager ensures that the firm is well capitalised i.e. they have the right amount of capital and that the firm has the right combination of debt and equity.
- Investment Decision: Once the business firm has gained access to capital, the finance manager has to take a decision regarding the use of the funds in a systematic manner so that it will bring a maximum return for its owners. For this, the firm has to take into consideration the cost of capital. Once they know the cost of capital, the firm can deploy or use the funds in such a way that returns are more than the cost of capital.
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संबंधित प्रश्न
Match the correct pairs:
| Group “A” | Group “B” | ||
| 1 | Financial planning | a. | Dividend |
| 2 | Public deposit | b. | Less applications than expected |
| 3 | Private placement | c | Owned capital |
| 4 | Secured debentures | d. | Advance programming of the financial plan |
| 5 | Return on share | e. | Bonus |
| f. | Issuing shares without inviting the public for subscription |
||
| g. | Maximum 7 years | ||
| h. | Security about repayment | ||
| i. | Maximum 36 months | ||
| j. | Management of business activities |
Company has to pay ______ to government.
Business firm gives green signal to the project only when it is profitable.
Find the odd one.
Find the odd one.
Complete the sentence.
When there is boom in economy, sales will ______
Answer in one sentence.
What is production cycle?
Correct the underlined word and rewrite the following sentence.
When there is recession in economy sales will increase.
Explain the following term/concept.
Investment decision
Business firm gives green signal to the project only when it is profitable.
Explain the following term/concept in detail:
Corporate Finance
Select the correct option from the bracket and complete the table:
(Funds for long-term, Rights issue, 36 months, Deploy funds in systematic manner, Charge on tangible assets)
| Group 'A' | Group 'B' | ||
| (a) | Investment decision | (1) | ____________ |
| (b) | ____________ | (2) | Shares offered to existing equity shareholders |
| (c) | Secured deposits | (3) | ____________ |
| (d) | ____________ | (4) | Maximum period of deposits |
| (e) | Capital market | (5) | ____________ |
Business firm gives green signal to the project only when it is profitable.
Business firm gives green signal to the project only when it is profitable.
Liberal credit policy creates a problem of bad debts.
Finance is the management of ______ affairs of the company.
Finance is the management of ______ affairs of the company.
