Financial Assignement

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Introduction to Finance|

STUDENT NAME: Alison Bierlaire (BA 1)
SOURCE | TITLE: Fundamentals of Financial Management,
Chapter 1: The role of Financial Management, -------------------------------------------------
Page 14, Question 6 & 10

Q.6: What are the three major functions of the financial manager? How are they related?

As we know, a financial manager concerns the acquisition, financing and management of asset with some overall goal in mind. From this definition we can extract the three major function of the financial manager: * Taking investment decision: this function concerns the choice of optimal size of the firm, the specific asset that should be reduced and asset that should be acquired. * Taking financing decision: in this function, the financial manager takes decision about the type of financing, financing mix and dividend policy. * Taking asset management decision: in this function, the financial manager has to manage existing asset efficiently.

The link between those three functions is easy to see: the cost of financing and managing an asset that is going to be acquired is a significant element that can influence all the different investment decision that a financial manager can take. Also, the acquisition of different asset can only be the result of a deep understanding of existing assets (asset management) combined to some financial decision (financing decision).

Q.10: How does the notion of risk and reward govern the behaviour of the financial managers?

“No pain, no gain” is an expression that can clearly illustrate the relation that exist between risk and reward. In other words, good reward (gain) will only come with...
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