Match List-I with List-II:
| List-I | List-II |
|---|---|
| (A) Business finance | (I) Choice of assets in which the firm’s funds are to be committed |
| (B) Financing decision | (II) Optimal procurement as well as usage of finance |
| (C) Investment decision | (III) Money required at every stage in the life of an enterprise |
| (D) Financial management | (IV) Quantum of funds to be raised from various long-term sources |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → (A)-(III), (B)-(IV), (C)-(I), (D)-(II)
| List-I | List-II | Reason |
|---|---|---|
| (A) Business finance | (III) Money required at every stage in the life of an enterprise | Business finance is the money needed to carry out business activities. It is needed to start, run, modernise and expand a business. |
| (B) Financing decision | (IV) Quantum of funds to be raised from various long-term sources | The financing decision settles how much is raised and from which long-term source, such as shareholders’ funds or borrowed funds. |
| (C) Investment decision | (I) Choice of assets in which the firm’s funds are to be committed | Funds are scarce, so the firm must choose the assets to invest in. The investment decision is about how funds are put into different assets. |
| (D) Financial management | (II) Optimal procurement as well as usage of finance | Financial management covers both sides: getting funds at the lowest cost and risk, and using them so that returns exceed that cost. |
NCERT (2026-27 Edition): “Meaning of Business Finance Money required for carrying out business activities is called business finance. Almost all business activities require some finance. Finance is needed to establish a business, to run it, to modernise it, to expand, or diversify it. It is required for buying a variety of assets, which may be tangible like machinery, factories, buildings, offices; or intangible such as trademarks, patents, technical expertise, etc. Also, finance is central to running the day-to-day operations of business, like buying material, paying bills, salaries, collecting cash from customers, etc. needed at every stage in the life of a business entity. Availability of adequate finance is, thus, very crucial for the survival and growth of a business.” “Financial Management All finance comes at some cost. It is quite imperative that it needs to be carefully managed. Financial Management is concerned with optimal procurement as well as the usage of finance. For optimal procurement, different available sources of finance are identified and compared in terms of their costs and associated risks. Similarly, the finance so procured needs to be invested in a manner that the returns from the investment exceed the cost at which procurement has taken place. Financial Management aims at reducing the cost of funds procured, keeping the risk under control and achieving effective deployment of such funds. …” “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. …” “Financing Decision This 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. …” |