#1
Which of the following is not a fundamental principle of financial management?
Cost Principle
ExplanationCost Principle is not a fundamental principle; it emphasizes financial transparency.
#2
What is the primary goal of financial management?
Maximizing shareholder wealth
ExplanationFinancial management aims to maximize shareholder wealth as its primary goal.
#3
What is the primary objective of the Risk-Return Tradeoff principle?
To find a balance between risk and return
ExplanationThe primary objective of the Risk-Return Tradeoff is to find a balance between risk and return.
#4
What does the Time Value of Money principle state?
Money earned today is worth more than the same amount in the future
ExplanationThe Time Value of Money principle asserts that present money holds greater value than future money.
#5
Which financial principle suggests that higher returns are associated with higher risk?
Risk-Return Tradeoff
ExplanationThe Risk-Return Tradeoff principle posits that higher returns come with higher associated risks.
#6
What does the principle of Diversification entail?
Investing in multiple assets with different risk levels
ExplanationDiversification involves investing in varied assets with differing risk levels.
#7
What does Profit Maximization principle focus on?
Maximizing profits in the short term
ExplanationProfit Maximization focuses on maximizing short-term profits.
#8
Which financial principle emphasizes the importance of minimizing the cost of capital?
Cost Principle
ExplanationThe Cost Principle underscores the significance of minimizing the cost of capital.
#9
Which principle focuses on maintaining a balance between debt and equity financing?
Capital Structure Theory
ExplanationCapital Structure Theory focuses on balancing debt and equity financing.