Summary of NIOS Class 12th Business Studies Most Important Questions with Answer | Tandav Batch Day 3rd

Summary of the Video:

NIOS Class 12th Business Studies Most Important Questions with Answer | Tandav Batch Day 3rd

Main Topics Covered:

  1. Introduction to Business Finance (Module 3)
    • Importance of finance in business.
    • Overview of chapters 10, 12, and 13.
    • Emphasis on the question bank available on the official website.
  2. Financial Management
    • Definition: Planning, raising, controlling, and administering funds.
    • Key financial decisions:
      • Investment Decisions: Choosing productive assets for long-term (capital budgeting) and short-term (working capital) investments.
      • Financing Decisions: Deciding the best way to raise funds (debt vs equity), timing, and mix.
      • Dividend Decisions: How much profit to distribute as dividends vs retained earnings for growth.
  3. Investment Decisions
    • Capital budgeting: Long-term investment in fixed assets.
    • Working capital decisions: Managing day-to-day expenses and short-term investments.
    • Example: Investing money where it yields good returns and is safe.
  4. Financing Decisions
    • Debt (borrowed money) vs Equity (owner’s money).
    • Debt includes loans and bonds; equity includes common and preferred shares.
    • Importance of choosing the right mix to minimize cost and risk.
  5. Dividend Decisions
    • Deciding the portion of net profit to distribute as dividends and the portion to retain for business expansion.
    • Retained earnings are reinvested profits.
    • Factors affecting dividend decisions: profit level, cash availability, growth plans, legal regulations, and shareholder satisfaction.
  6. Profit Maximization vs Wealth Maximization
    • Profit maximization: Short-term focus on quick profits.
    • Wealth maximization: Long-term focus on company growth and market goodwill.
    • Real-life example: Jio’s initial loss-bearing strategy for long-term wealth maximization.
  7. Financial Planning
    • Assessing current financial status and setting future goals.
    • Importance of planning to meet financial needs and avoid wastage.
    • Example of saving and investing money wisely to meet goals like buying a house.
  8. Fixed Capital vs Working Capital
    • Fixed Capital: Long-term assets, not easily converted to cash, used for more than one year.
    • Working Capital: Short-term assets, highly liquid, used for daily operations.
    • Differentiation points for exams.
  9. Important MCQs and Exam Tips
    • Practice questions on investment, financing, and dividend decisions.
    • Strategy to handle “All of the Above” or “None of These” options.
    • Importance of reading questions carefully.
  10. Debt and Equity Components
    • Debt: Loans and bonds, must be repaid with interest.
    • Equity: Ownership shares, includes common and preferred shares.
    • Preference shares have preferential rights on dividends and repayment.
  11. Capital Structure
    • Combination of debt and equity used to finance business operations.
    • Good capital structure reduces risk and cost, supports growth.
  12. Objectives of Financial Planning
    • Ensuring right amount of funds.
    • Proper utilization of funds.
    • Avoiding wastage.
    • Maintaining financial stability.
  13. Special Financial Institutions (SFI)
    • Government-backed organizations providing long-term loans.
    • Examples: IDBI, SIDBI, IFCI, EXIM Bank.
    • Merits: Long-term support, expert advice.
    • Demerits: Lengthy procedures, strict rules, interference in business decisions.
  14. Lease Financing
    • Contractual use of assets owned by another party for a fixed period in exchange for rent.
    • Advantages: No large upfront investment, tax benefits.
    • Limitations: No ownership, restrictions on asset modification.
  15. Financial Markets (Chapter 13)
    • Platform for buying and selling financial assets like stocks and bonds.
    • Two types:
      • Money Market: Short-term funds (less than 1 year), dealing with credit instruments like bills of exchange, promissory notes.
      • Capital Market: Medium and long-term funds, dealing with shares, debentures, bonds.
    • Role of stock exchanges:
      • Facilitate trading.
      • Price discovery.
      • Provide liquidity.
      • Encourage savings and capital formation.
    • SEBI’s role in regulation:
      • Ensures transparency, investor protection, ethical behavior, market monitoring, and corporate governance.
  16. Negotiable Instruments
    • Bill of Exchange: Unconditional order by one party to another to pay a certain sum to a third party.
    • Promissory Note: Unconditional promise made by one party to pay a certain sum to another.
    • Examples and explanation of parties involved.
  17. Demat Account and Buying Shares
    • Demat account is

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