Which principles are the authors referring to in

Which principles are the authors referring to in the above statement?

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MBA Financial Management


Important: Only answer 4 of the 6 Questions.

Must show workings out/Calculations on scrap paper - Scrap paper must be turned in with answers to questions.

Font size 12 Calibri

1.5 spacing

Prescribed textbook

Petty, J, Titman, S, Keown, A, Martin, J, Martin, P, Burrow, M & Nguyen, H 2012, Financial Management: Principles and applications, 6th edn, Pearson Australia, NSW.

(ISBN: 9781442539174)

The models of calculators are Casio FX 115ES (or FX100AU or FX100AU-BP or FC-200V or FC-100V or FX-115MS or FX-82TL or FX-82AU/ FX-82 AU Plus II or FX100S or FX82MS or FX100MS) or Sharp EL-738 (or EL-738 S or EL-735 or EL-735S or EL-531XH),

HP 10bll+ (or 10bll, 12c, 17bll+) or TI BA11 


MBA Financial Management Name Course Instructor Date Question 1 Petty et.al says in their textbook, “However, while it is not necessary to understand finance in order to understand these principles, it is necessary to understand these principles in order to understand financial management.” Which principles are the authors referring to in the above statement? What is the importance of these principles? The authors emphasize that there are 10 principles that influence the decisions making process in financial management, and the form the basis for financial concepts in the book. The 10 principles are: The risk-return trade-off Time value of money Cash flow is the source of value rather than profits Incremental cash flows are relevant The curse of competitive markets (why it is hard to find exceptionally valuable projects) Capital markets are efficient and prices reflect the information available The agency problem/ conflict of interest Taxes bias business decisions The risk are not equal[ some can be diversified There is need for ethical behavior, but decisions makers are also faced with ethical dilemmas in finance Please explain with the help of detailed examples how any three of these principles can benefit an individual or a corporation financially. The risk-return trade-off The risk-return trade-off states that when the risk in undertaking an investment project is high so are the potential returns. As such, when analyzing the viability of an investm...

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