Correct Answer: Statement 1 is true, and statement 2 is false.
   

Solution : The correct answer is (a) Statement 1 is true, and statement 2 is false.

Statement 1 is true. Financial planning indeed aims to maximize the wealth of shareholders and increase the overall value of the company. The goal is to make financial decisions that enhance shareholder value by generating profits and returns on investment.

Statement 2 is false. Financial planning does not disregard the interests of stakeholders. In fact, it considers the interests of all stakeholders, including shareholders, employees, creditors, and the broader community. Effective financial planning involves aligning the interests of stakeholders with the company's financial goals and strategies.

Correct Answer: To fund its expansion plans and meet capital requirements

Solution : The correct answer is (d) To fund its expansion plans and meet capital requirements

Expanding operations in a business often requires substantial capital investment for various purposes, such as acquiring new assets, increasing production capacity, entering new markets, hiring additional staff, and covering increased operational expenses. Business finance is essential to provide the necessary funding to support these expansion initiatives and ensure the company's growth and sustainability in the market.

Correct Answer: Maximizing shareholder wealth
   

Solution : The correct answer is (a) Maximizing shareholder wealth

Financial planning in a corporation involves strategies and actions aimed at optimizing the use of financial resources to achieve long-term goals and ultimately enhance shareholder wealth. It encompasses planning for investments, managing cash flows, optimizing capital structure, and making informed financial decisions to increase profitability, drive growth, and maximize the value of the business for its shareholders. While meeting daily operational expenses and ensuring efficient resource utilization are important aspects of financial planning, the overarching objective is to create value and wealth for the shareholders.

Correct Answer: Incorporating flexibility in the plans
   

Solution : The correct answer is (a) Incorporating flexibility in the plans

Incorporating flexibility in plans is a key strategy for overcoming the limitations of planning. While planning is essential for setting a direction and providing a framework, rigid and inflexible plans may not account for unexpected changes or dynamic conditions in the business environment.

On the other hand, relying solely on top management's decisions, limiting employee involvement, and adopting a reactive approach are not effective strategies for overcoming the limitations of planning. Involving employees, considering diverse perspectives, and being proactive in addressing challenges are generally more conducive to long-term success in a dynamic business environment.

Correct Answer: Planning reduces creativity.
 

Solution : Planning limits creativity as it need to implemented in the same way it has formulated. Managers donot get the opportunity to show their skills. There is nothing new discoverd or innovated.
Hence Option C is correct.

Correct Answer: The company has the option to buy back the debentures
    

Solution : The correct answer is (b) The company has the option to buy back the debentures

When debentures are labeled as "callable," it means that the issuing company has the right, but not the obligation, to buy back or redeem the debentures before their maturity date. Typically, there are specific terms and conditions outlined in the debenture agreement regarding when and how the company can exercise this option to call or buy back the debentures. This provides flexibility to the company to manage its debt and capital structure.

Correct Answer: He conceptualised the framework for the Second Five-Year Plan.

Solution : The correct option is He conceptualised the framework for the Second Five-Year Plan.

P. C. Mahalanobis is linked to India's Five-Year Plans, notably the Second Plan (1956–1961), for his pioneering Mahalanobis Model. As an influential statistician, he formulated a framework emphasising quantitative data for industrialisation and regional development, significantly shaping India's economic planning. His contributions played a crucial role in guiding the country's path to economic growth during this period.

Correct Answer: Corporate bonds

Solution : The correct answer is (d) Corporate bonds.

Corporate bonds are debt securities issued by corporations to raise capital. They have a fixed interest rate and a specific maturity period, making them the most suitable choice based on the information provided in the question. Corporate bonds pay regular interest to bondholders until maturity when the principal amount is repaid.

Correct Answer: Inflexibility in adapting to changes

Solution : The correct answer is (c) Inflexibility in adapting to changes

Inflexibility in adapting to changes is a common limitation of planning. If a plan is too rigid and does not allow for adjustments based on evolving circumstances or unexpected challenges, it can hinder the organization's ability to navigate successfully through the expansion process.

Correct Answer: Primary market
 

Solution : The correct answer is (a) Primary market

If MNO Inc. is considering issuing bonds to finance its acquisition plans, it represents a primary market activity. The primary market is where new securities, such as bonds and stocks, are issued for the first time and sold directly by the issuing company to investors. In this case, MNO Inc. would issue bonds to raise funds for its acquisition plans. Investors would purchase these newly issued bonds directly from MNO Inc., and the company would receive the proceeds from the sale of these bonds. This infusion of capital from the sale of bonds would then be used to finance the acquisition of other companies, helping MNO Inc. diversify its business operations.

The secondary market, on the other hand, is where existing securities are bought and sold among investors, and the issuing company does not directly receive proceeds from these transactions. The money market primarily deals with short-term debt securities, and the capital market encompasses both the primary and secondary markets for long-term securities.