Financial Management : Part-1

Short Notes: Financial Management (Part-1)

» What is profit maximization?
Answer: Profit maximization means maximizing the profit of the firm.

» What is economic value added EVA?
Answer: EVA is a popular measured by many firms to determine whether aw investment proposed or existing contributes positively to thrower’s wealth. EVA is calculated by subtracting the cost of funds used to finance n investment from its after-tax operation profits.

» What is public finance?
Answer: Financing by federal, state, local governments and municipal corporations are public finance. It is concerned with the financial requirement, receipts and disbursements of different government bodies.

» Who is treasurer?
Answer: The treasurer is financial manager of a firm. The treasurer’s functions are secondary and external, works and relate to the liability side of the balance sheet.

» What is financial market?
Answer: A financial market is market for creation and exchange of financial assets.

» What is primary market?
Answer: A primary is a “New issues” market and a firm raises new capital from this market.

» What is corporate financial?
Answer: Corporate financial deals with promotion, capitalization and financing, investing and financial administration of the carnation.

» What is agency problem?
Answer: Conflict of interest in my relationship where one party is expected to act in another’s best interest. This conflict of owner and personal goals arise what have been called agency problem, the like hood that managers may place personal goals ached of corporate goals.

» What is agency cost?
Answer: The cost borne by the stockholders to maintain a governance structure that maximizes agency problems and contributes to the maximization of owner wealth.

» What is risk premium?
Answer: The excess return required from an investment in a likely assets over that from a risk free investment.

You can also read: Financial Management : Part-2