Introduction to Financial Management

Daffodil International University Faculty of Business & Entrepreneurship Department of Accounting Program: BBA in Accounting Semester: Fall- 2026 Time: 1 Hour and 30 Minutes Course Code: 0412-201 Section: All Examination: Mid-term Full Marks: 25 Course Title: Introduction to Financial Management Teacher's Name: ASM Answer the following questions 1. a. "The ultimate goal of the firm is to maximize wealth, not to maximize profit" Explain the statement logically. 03 (CLO 1, Level 2) b. Explain the major financial decisions required from a financial manager for the effective utilization of a company's funds. 03 (CLO1, Level 2) c. Distinguish between business risk and financial risk. 02 (CLO1, Level 2) 2. Stock A and B have the following probability distribution of expected future returns: Probability | Stock A | Stock B 0.1 | -10% | -35% 0.2 | 12% | 10% 0.4 | 12% | 20% 0.2 | 20% | 25% 0.1 | 38% | 45% An investor seeks your opinion as to which stock he should invest his money in. Which stock would you recommend that the investor buy? Explain. 09 (CLO 2, Level 4) 3. ABC Company wants to collect Tk. 50,00,000 as working capital. The following alternatives are available for short-term financing: i. Forgo cash discount granted on the basis of 3/10, net 80. If the discount period is stretched by 10 days. ii. Borrow a bank loan at the rate of 12% and maintain 15% compensating balance. Interest will be paid in advance. iii. Issue 6 months commercial paper at Tk. 1,000 face value and sale value is Tk. 900 with 3% flotation cost. Requirement: Which alternative should the company select and why? 08 (CLO 3, Level 4)