Explain how you will apply in real life the following AXIOMS of FINANCIAL MANAGEMENT  AXIOM 1: RISK-RETURN TRADE OFF AXIOM 2: TIME VALUE OF MONEY AXIOM 3: CASH NOT PROFIT IS KING

Q: The principle of gearing 2. Why debt is cheaper than equity 3. What the effect will be on the risk…

A: Gearing is the debt-to-equity relationship or ratio of a firm. Gearing indicates how much of a…

Q: Behavioural finance specialist may concede that there are no easy profits but argue that arbitrage…

A: When the goods and services cannot be availed at no cost it is known as the no free lunch principle.…

Q: how

A: Market risk is the potential for losses arising from adverse movements in market prices, such as…

Q: Hedging is a risk management strategy that is used in limiting or offsetting probability of loss…

A: Financial risk managers analyse the market trend and accordingly take financial decisions.Roles and…

Q: ing process, and hence investment markets are efficient, reflecting all available information in…

A: There are many theories in the finance which explain the behavior of investors and the market.

Q: Which of the following is a constrain for the investors? a. The mentality tontake the high risk b.…

A: Investing is a critical component of wealth growth. It enables the investor to fight inflation,…

Q: ance.perhaps you have come across behavior or aspect of financial market that you think can be…

A: Introduction : In simple words, behavioral finance refers to the study branch of finance which deals…

Q: Determine whether the sentences are True Or False: 1) Stabilizing the economy is the primary…

A: 1) Answer: False Central banks have the main task of stabilizing economy. Commercial banks have the…

Q: Explain how the concepts of risk and return drive invesments in business world

A: The concept of risk and return is very important in the domain of finance and financial management.…

Q: All else the same, which of the following management decisions would help alleviate the problem of a…

A: To alleviate the problem of excess cash, company’s management can take following steps- Investment…

Q: Discuss the concepts of adverse selection and moral hazard. Provide an example of each of these…

A: Adverse selection or negative selection describes a situation where the two parties to a transaction…

Q: 1. Explain how capital reduces banking risks. Discuss the importance of cash flows and economic…

A: Capital reduces banking risks:  It reduces banking risk by protecting against insolvency. It is used…

Q: In the case of a perfect capital​ market, according to Modigliani and Miller Proposition I and​ II,…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: financia

A: The payout policy and the investment policy both are related to the dividend payout, and both are…

Q: Profitable projects are difficult to find.    a. Efficient capital markets b. The curse of…

A: Profitable project are difficult to find just because of severe competition world wise, because in…

Q: it better to finance a company thru debt or thru equity? Why? What are the downside and upside to…

A: A business can raise funds predominantly either by  Issuing Equity, or Borrowings Loans, Issuing…

Q: Markets can never be strong-form efficient because: a. There are too many traders in them. b.…

A: Market efficiency is referred to as an ability that are possessed in the markets, which includes the…

Q: Explain the principle of increasing financial risk and why it is important when assessing the…

A: Financial risk refers the risk that the organization may not be able to repay its loan. This may…

Q: What are the possible actions that a firm can take if it experiences a financial failure?

A: Financial failure of the firm could be resulted because of overspending, higher degree of illiquid…

Q: What are the major instruments traded in capital markets?

A: The capital market helps provide a platform where financial instruments are issued by the firms to…

Q: open

A: Open market operations refer to the act of purchasing or selling the securities of the government by…

Q: bt financing is likely to appeal most strongly to organizations that have predictable profits and…

A: In Debt financing there are interest payment to be made each period but there are tax deductions for…

Q: How banks can improve their return on equity and what are its negative externalities.

A: RoE is ubiquitous in banks, serving as both an indicator of overall performance and a means of…

Q: 1. a robust finacial market is one of the pillars of stable economic growth and secured financial…

A: A robust financial market is one of the pillars of stable economic growth and secured financial…

Q: Discuss the importance of market efficiency, and explain why some markets are more efficient than…

A: Market efficiency is defined as the degree, where the market prices used to get reflected as per the…

Q: market prices reflect underlying asset values.

A: Market refers to the place where the purchase or sale of goods and services takes place like…

Q: Finance in classical economics studies all of the following issues EXCEPT Time value of money…

A: Finance in calssical studies all the following: time value of money, equilibrium price risk, asset/…

Q: TRUE OR FALSE Financial sector creates products for the management of risk, thus risk can be…

A: Risk management is the process of identifying, analyzing, and accepting or mitigating uncertainty in…

Q: Tirole’s model of moral hazard associated with external financing (whether debt or equity) has…

A: A moral hazard develops when there is disproportionate knowledge between two parties and a shift in…

Q: 15 Mudarabah and Musharakah fall under profit and loss sharing transactions and have other risks…

A: Mudarabah and Musharakah fall under profit and loss sharing transactions and have other risks…

Q: stor who wish to take high risk would invest his money in Risk is interrelated to returns Debt…

A: Investor is defined as the person or individual who assign the capital with the future expectation…

Q: The possibility that a business may not be able to repay a bank loan because of an economic downturn…

A: Risk management is the process of identifying, assessing and controlling threats to an…

Q: Refers to the inability of the business to meet its obligations as they mature on account of…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: What are the disadvantages of the financial intermediaries and the negative ways they can impact the…

A: A financial intermediary is that entity that acts as a middleman in a financial transaction taking…

Q: Question 4 What are the attributes of quality assumptions in financial modelling? Question 5

A: We often do financial modelling in different areas of finance. For instance valuing a company on the…

Q: Which of the statement is TRUE in financial decision making?      A. When the economy is growing of…

A: Financial Decision making refers to the decisions made by the managers with regard to the finances…

Q: Financial intermedires play a crucial role in an economic crisis they are responbile for both…

A: Financial intermediaries are the middle person between the financial market and the investors. They…

Q: What is free cash flow, and how does it work? If you were an investor, why could you be more…

A: When all operational costs and capital expenditures have been met, free cash flows represent the…

Functions of Financial Institutions

Financial institutions are businesses that are formed to deal with financial and monetary transactions. These organizations primarily accept deposits, advance loans, make investments, and provide foreign exchange services. Financial institutions include, but are not limited to, banks, insurance companies, trust companies, brokerage firms, and investment bankers. Because financial institutions play such an important role in the economy in terms of monetary transactions, regulating their activities has become a requirement for governmental authorities. As a result, the government creates a multitude of laws and regulations to oversee the activities of financial institutions.