Question

1. How does a company's financing strategy impact its operations and performance?
2. What is risk, and how does it affect decisions about investment?

Answer 1

1. Company financing strategy is focused at efficient management of financial resources which will be impacting its operation and performance because it is focused at taking various project which will maximize the profit of the company, and minimise the risk of the company so it will overall focus at maximization of the profit and the growth of the company so it will affect the operation the performance of the company because of allocation of financial resources through financial management.

2. Risk is all such threats to the investment and it can lower the value of the investment.

It is always believed that higher the risk, higher the reward so company will have to take higher risk in order to make higher returns.

Risk averse company will always be looking for taking lowest possible risks and it will be happy with normal rate of return.