Question : Assertion-Reason Questions: Chapter - Sources of Business Finance
Questions : Business Finance and Its Meaning
Assertion: Need for business finance arises due to various uncertainties and risks associated with business activities.
Reason: Financial planning eliminates all forms of business risk and uncertainties.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Both assertion and reason are false.
Correct Answer: Assertion is true, but the reason is false.
Solution : The correct answer is (c) Assertion is true, but the reason is false.
The assertion is true. Businesses face uncertainties and risks regularly, such as market fluctuations, economic changes, competition, and other variables. Business finance is needed to mitigate and manage these risks effectively.
The reason is false. Financial planning does not eliminate all forms of business risk and uncertainties. While financial planning helps in managing and mitigating risks by providing a structured approach to financial management, it cannot completely eliminate the inherent risks and uncertainties associated with business activities. Risk management is a part of financial planning, but it doesn't eradicate risks altogether.
Assertion: Business finance involves making investment decisions that impact the profitability of the company.
Reason: Investment decisions are independent of financial planning.
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