Anekant Education Society’s

Tuljaram Chaturchand College of Arts, Science & Commerce, Baramati [Autonomous]

Department of BBA

Question Bank Principle of Finance

1. Finance is the function of managing _______ and other assets in order to make financial
decisions and achieve financial goals.

1. Money

2. Investments

3. Budgets

4. Risks

2. Financial management is the process of managing an organization's _______ resources in

order to achieve its financial goals.

1. Monetary

2. Fiscal

3. Capital

4. Financial

3. Traditional approaches to financial management focus on maximizing shareholder wealth and

_______ maximization.

1. Profit

2. Revenue

3. Equity

4. Cash flow

4. The role of a finance manager includes financial planning, budgeting, financial analysis,
investment decisions, financing decisions, risk management, and financial _______.

1) Reporting - tracking financial performance and preparing financial reports

2) Forecasting - predicting future financial outcomes and making strategic decisions

3) Forecasting - predicting future financial outcomes and making strategic decisions

 4) Monitoring - overseeing financial operations and ensuring compliance with regulations

5. Over capitalization can result in ________ operations and lower ________ on investment.
1. Inefficient operations and lower returns on investment
2. Bloated operations and diminished returns on investment
3. Overextended operations and reduced returns on investment
4. Excessive operations and decreased returns on investment

6. Causes of under capitalization may include ________ financial planning and ________
expenses.

1. Poor financial planning and underestimated expenses

2. Lack of financial forecasting and unnecessary expenditures

3. Inadequate budgeting and inflated costs

4. Mismanagement of funds and excessive spending.

7. Remedies for under capitalization can include obtaining additional ________, restructuring debt,
or increasing ________ through cost-cutting measures.

1. Capital, revenue

2. Restructuring debt

3. Increasing financial resources

4. cost-cutting measures

8. Equity shareholders are called

A. Owners of the company B. Partners of the company C. Executives of the company
D. Guardian of the company Answer:

9. The term ‘redeemable’ is used for

A. Preference shares
B. Commercial paper
C. Equity shares
D. Public deposits

10. Funds required for purchasing current assets is an example of

A. Fixed capital requirement
B. Ploughing back of profits
C. Working capital requirement
D. Lease financing
11. Equity shareholders are called

A. Owners of the company B. Partners of the company C. Executives of the

company
D. Guardian of the company

12. The term ‘redeemable’ is used for

A. Preference shares
B. Commercial paper
C. Equity shares
D. Public
deposits

13. Funds required for purchasing current assets is an example of

A. Fixed capital requirement
B. Ploughing back of profits
C. Working capital requirement
D. Lease financing

14. ADRs are issued in

A. Canada
B. China
C. India
D. USA

15. Public deposits are the deposits that are raised directly from
A. The public
B. The directors
C. The auditors
D. The owners
2 Marks Questions
1. What are some current cases in fin tech, investment banking, and neo banks that
are being discussed in finance classes?
2. What is the nature and significance of venture capital in the financial industry?
3. How does leasing play a role in finance and what are some recent trends in the
leasing market?
4. What is microfinance and how does it impact underprivileged individuals and
communities?
5. What is the role and importance of mutual funds in the financial sector and what
are some recent developments in this area?
6. What are the criteria for determining a company's capital structure?
7. How do factors such as profitability, industry risk, and growth prospects affect a
firm's capital structure?
8. What is over-capitalization and what are its causes, consequences, and remedies?
9. What is under-capitalization and what are its causes, consequences, and remedies?
10. What are the potential impacts of an inappropriate capitalization on a company's
financial health and performance?
11. What are the advantages and limitations of raising funds through shares,
debentures, public deposits and borrowing from banks?
12. How can companies utilize reserves and surplus, bonus shares, and retained
earnings as internal sources of funding?
13. What is the significance of dividend policy in relation to internal sources of
funding?
14. How does raising funds externally through shares and debentures differ from
borrowing from banks?
15. What are the advantages of utilizing internal sources of funding such as reserves
and surplus for a company?
16. How can a company effectively manage its internal sources of funding to support
growth and expansion?
17. What is the role of finance in an organization?
18. How does financial management differ from other management functions?
19. What are the traditional approaches to financial management?
20. What are the modern approaches to financial management?
21. What are the key responsibilities of a finance manager?
22. How does the finance function contribute to overall organizational success?
23. How does the finance manager ensure financial stability and growth of the
organization?
 3 Mark Questions
1. Explain the importance of financial management?
2. Explain the role of financial manager?
3. Explain the features of preference shares?
4. Explain the types of preference shares?
5. Differences between preference share & equity shares?
6. Explain the features of reserve?
7. Explain the basic considerations of financial planning?
8. Explain the venture capital advantages and disadvantages?
9. Explain the nature of leasing?
10. Explain the mutual funds advantages & disadvantages
11. Explain the scope of finance function
12. Types of financial planning
13. Characteristics of financial planning
14. Elements of financial planning
15. Net income (NI) approach
16. Features of dividend policy
17. Features of retained earning
18. Types of loans
19. Preference shares
20. Types of shares
4 Marks Questions
1. What are the importance &functions of financial management?
2. Explain the environment of finance in organisation of finance function?
3. Explain advantages & limitations of reserves & surplus as one of the important
internal sources of finance?
4. Explain the meaning of? Discuss the difference between operating leverages
&financial leverages?
5. What are the causes &consequences of under capitalizations?
6. What are the importance and process of financial planning?
7. What is financial forecasting? Explain its methods.
8. What do you mean by financial planning? Give its need & elements.
9. What is venture capital financing? Discuss the features &objectives of venture
capital.
10. What are the advantages and disadvantages of mutual fund?