Learning Unit 13 - The meaning of financial management

Question 1

What is the objective of Financial Strategy

(Managerial finance 10th edition Pg5)

Answer 1

Creating and preserving value that is responsibly derived for the benefit of all stakeholders.

Question 2

What is the objective of Financing Decisions

(Managerial finance 10th edition Pg5)

Answer 2

Responsibly obtaining funds with minimum cost and appropriate risk.

Question 3

What is the objective of Investment Decisions

(Managerial finance 10th edition Pg5)

Answer 3

Responsibly investing in projects with optimal returns and appropriate risk.

Question 4

List the six capitals

Answer 4

1. Natural capital
2. Human capital
3. Social and relationship capital
4. Intellectual capital
5. Manufactured capital
6. Financial capital

Question 5

What are capital markets?

Answer 5

Capital markets are the markets which trade in long-term finance.

Question 6

What are the five key principles that an institutional investor should adhere to in terms of the CRISA code?

Answer 6

• Incorporate sustainability considerations, including ESG, into its investment analysis and investment activities
• Demonstrate its acceptance of ownership responsibilities in its investment arrangements and investment activities
• Introduce controls to enhance a collaborative approach to promote acceptance and implementation of sound governance principles
• Recognize the circumstances and relationships that hold a potential conflict of interest and should manage these when they occur
• Be transparent about the content of their policies