The correct answer is option (3)- (A)-(III), (B)-(I), (C)-(IV), (D)-(II).
| List-I |
List-II |
| (A) Ensures that enough funds are available at right time |
(III) Financial Decision |
| (B) Quantum of finance to be raised |
(I) Financing Decision |
| (C) How the Firm's funds are invested |
(IV) Investment Decision |
| (D) How much profit should be retained |
(II) Dividend Decision |
(A) Ensures that enough funds are available at the right time - (III) Financial Decision.
Financial Management is concerned with optimal procurement as well as usage of finance. For optimal procurement, different available sources of finance are identified and compared in terms of their costs and associated risks. The primary aim of financial management is to maximise shareholders’ wealth. The market price of a company’s shares are linked to the three basic financial decisions Financial decision-making is concerned with three broad decisions which are Investment Decision, Financing Decision, Dividend Decision.
(B) Quantum of finance to be raised - (I) Financing Decision.
Financing Decision is about the quantum of finance to be raised from various long-term sources. Short-term sources are studied under the ‘working capital management’. It involves identification of various available sources. The main sources of funds for a firm are shareholders’ funds and borrowed funds. The shareholders’ funds refer to the equity capital and the retained earnings. Borrowed funds refer to the finance raised through debentures or other forms of debt. A firm has to decide the proportion of funds to be raised from either sources, based on their basic characteristics.
(C) How the Firm's funds are invested - (IV) Investment Decision.
Investment decision- A firm’s resources are scarce in comparison to the uses to which they can be put. A firm, therefore, has to choose where to invest these resources, so that they are able to earn the highest possible return for their investors. The investment decision, therefore, relates to how the firm’s funds are invested in different assets. Investment decision can be long-term or short-term.
(D) How much profit should be retained - (II) Dividend Decision.
Dividend Decision- The important decision that every financial manager has to take relates to the distribution of dividend. Dividend is that portion of profit which is distributed to shareholders. The decision involved here is how much of the profit earned by company (after paying tax) is to be distributed to the shareholders and how much of it should be retained in the business. | 
