Exam (elaborations)
FIN2601 Assignment 1 COMPLETE ANSWERS) Semester 2 2024
FIN2601 Assignment 1 COMPLETE ANSWERS) Semester 2 2024
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
1 review
By: thabisilem28 • 2 weeks ago
Content preview
,FIN2601 Assignment 1 COMPLETE ANSWERS)Semester 2 2024 - DUE August 2024 ; 100%
TRUSTED Complete, trusted solutions and
explanations.
Question 1 Complete Mark 1.00 out of 1.00 QUIZ Which of the
following statements are correct if a company focuses on profits
as financial goal? a) Risk is ignored. b) The share price is
ignored. c) The size of the investment required to generate the
profit is ignored. 1. a and b 2. c and a 3. b and c 4. a, b and c
Question 2 Complete Mark 1.00 out of 1.00
Question 1 Analysis
To determine which statements are correct regarding a
company’s focus on profits as a financial goal, we need to
analyze each statement in the context of profit maximization.
1. Risk is ignored.
When a company focuses solely on profits, it may
overlook the associated risks. Profit maximization can
lead to taking on high-risk projects or investments
without adequately assessing potential downsides.
This could result in significant losses if those risks
materialize.
2. The share price is ignored.
A focus purely on profits does not necessarily
consider how those profits translate into shareholder
value, which is often reflected in the company’s share
, price. While higher profits can lead to an increase in
share price, a narrow focus on profit alone might
neglect other factors that influence market
perception and valuation.
3. The size of the investment required to generate the profit
is ignored.
Companies that prioritize profit may disregard the
capital required to achieve those profits. This could
lead to situations where a company generates high
profits but requires excessive investment, making it
less efficient or sustainable in the long run.
Now, let’s evaluate the combinations provided:
a and b: This combination suggests that both risk and
share price are ignored when focusing on profits.
c and a: This indicates that both the size of investment and
risk are overlooked.
b and c: This implies that both share price and investment
size are neglected.
a, b, and c: This option states that all three aspects—risk,
share price, and investment size—are ignored.
Given our analysis:
Focusing solely on profits indeed leads to ignoring risk
(statement a), potentially overlooking how this affects
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller THEBLAZE1. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R44,93. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
73091 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now