AcAdemic YeAr 2025 | mAc2602 PrinciPles of
strAtegY, risk & finAnciAl mAnAgement
techniques – comPlete Assignment AnsWers |
Verified unisA mAnAgement Accounting guide |
uPdAted semester 2 2025 Portfolio |
comPrehensiVe finAnciAl And strAtegic studY
resource for south AfricAn students
Question 1: What is the primary purpose of strategic management in an
organization?
A) To increase employee satisfaction
B) To ensure compliance with legal regulations
C) To achieve long-term goals and maintain a competitive advantage
D) To manage financial resources effectively
Correct Option: C) To achieve long-term goals and maintain a competitive
advantage
Rationale: Strategic management focuses on setting objectives, analyzing competitive
environments, and ensuring the organization can sustain its competitive edge over the
long haul. This involves aligning resources and actions with the vision and mission of
the organization.
Question 2: In risk management, what does the term 'risk appetite' refer to?
A) The maximum level of risk that an organization is willing to accept
B) The total risk an organization is exposed to
C) The expected return on investment
D) The tolerance level for risk in pursuit of objectives
Correct Option: D) The tolerance level for risk in pursuit of objectives
Rationale: Risk appetite defines the amount and type of risk that an organization is
prepared to pursue or retain. It helps guide decision-making and risk management
strategies, ensuring that the organization takes calculated risks aligned with its
objectives.
Question 3: Which of the following is a key component of the SWOT analysis?
A) Weaknesses
B) Opportunities
C) Financial projections
D) Market share
,Correct Option: B) Opportunities
Rationale: SWOT analysis includes Strengths, Weaknesses, Opportunities, and
Threats. Opportunities refer to external factors that the organization can exploit to its
advantage, making it essential for strategic planning.
Question 4: What is the primary function of financial management?
A) To manage human resources
B) To ensure regulatory compliance
C) To manage the organization's financial resources effectively
D) To develop marketing strategies
Correct Option: C) To manage the organization's financial resources effectively
Rationale: Financial management focuses on planning, organizing, directing, and
controlling financial activities. Its main goal is to maximize shareholder value while
ensuring the organization's financial health.
Question 5: Which financial ratio is commonly used to assess a company's
liquidity?
A) Debt to equity ratio
B) Return on equity
C) Price to earnings ratio
D) Current ratio
Correct Option: D) Current ratio
Rationale: The current ratio measures a company’s ability to pay short-term
obligations. It is calculated by dividing current assets by current liabilities, indicating
liquidity position.
Question 6: In strategic planning, what does the term 'mission statement' refer to?
A) A detailed financial plan
B) A list of company goals
C) A statement of the organization's purpose and values
D) A competitive analysis
Correct Option: C) A statement of the organization's purpose and values
Rationale: A mission statement defines the organization's reason for existence,
outlining its core values and purpose, guiding decision-making and strategic planning.
,Question 7: What does the term 'diversification' mean in a business context?
A) Focusing on a single product line
B) Expanding into new markets or products
C) Reducing operational costs
D) Spreading investments across various sectors
Correct Option: D) Spreading investments across various sectors
Rationale: Diversification involves entering new markets or developing new products to
reduce risk and increase opportunities for growth, spreading investments to mitigate
financial exposure.
Question 8: Which of the following best describes 'capital budgeting'?
A) The process of managing day-to-day expenses
B) The assessment of long-term investment opportunities
C) The evaluation of operational efficiency
D) The allocation of resources for long-term projects
Correct Option: D) The allocation of resources for long-term projects
Rationale: Capital budgeting is the process of planning and managing a firm’s long-
term investments. It involves evaluating potential expenditures or investments that are
significant in amount.
Question 9: What is the role of a strategic leader?
A) To manage daily operations
B) To enforce compliance regulations
C) To create and communicate a vision for the future
D) To allocate financial resources
Correct Option: C) To create and communicate a vision for the future
Rationale: Strategic leaders are responsible for defining the vision and direction of the
organization, motivating and guiding teams to achieve long-term objectives.
Question 10: In which phase of the risk management process is risk mitigation
primarily addressed?
A) Risk identification
B) Risk response
C) Risk assessment
D) Risk monitoring
, Correct Option: B) Risk response
Rationale: The risk response phase involves developing strategies to reduce or
eliminate risks, including risk avoidance, reduction, sharing, or acceptance.
Question 11: Which financial statement provides a snapshot of a company's
financial position at a specific point in time?
A) Income statement
B) Balance sheet
C) Cash flow statement
D) Statement of retained earnings
Correct Option: B) Balance sheet
Rationale: The balance sheet presents the company’s assets, liabilities, and equity at a
specific point in time, providing insights into its financial stability.
Question 12: What is the primary goal of risk assessment?
A) To eliminate all risks
B) To create a risk management plan
C) To identify and evaluate risks
D) To develop financial forecasts
Correct Option: C) To identify and evaluate risks
Rationale: Risk assessment involves identifying potential risks to the organization and
evaluating their impact and likelihood, providing necessary information for effective risk
management.
Question 13: What does 'market segmentation' involve?
A) Creating a single marketing strategy for all customers
B) Ignoring customer preferences
C) Dividing a market into distinct groups of buyers
D) Tailoring marketing strategies to specific customer segments
Correct Option: D) Tailoring marketing strategies to specific customer segments
Rationale: Market segmentation allows businesses to identify and target specific
groups within the broader market, enhancing effectiveness by catering to the unique
needs of each segment.
Question 14: In financial management, what is 'working capital'?
strAtegY, risk & finAnciAl mAnAgement
techniques – comPlete Assignment AnsWers |
Verified unisA mAnAgement Accounting guide |
uPdAted semester 2 2025 Portfolio |
comPrehensiVe finAnciAl And strAtegic studY
resource for south AfricAn students
Question 1: What is the primary purpose of strategic management in an
organization?
A) To increase employee satisfaction
B) To ensure compliance with legal regulations
C) To achieve long-term goals and maintain a competitive advantage
D) To manage financial resources effectively
Correct Option: C) To achieve long-term goals and maintain a competitive
advantage
Rationale: Strategic management focuses on setting objectives, analyzing competitive
environments, and ensuring the organization can sustain its competitive edge over the
long haul. This involves aligning resources and actions with the vision and mission of
the organization.
Question 2: In risk management, what does the term 'risk appetite' refer to?
A) The maximum level of risk that an organization is willing to accept
B) The total risk an organization is exposed to
C) The expected return on investment
D) The tolerance level for risk in pursuit of objectives
Correct Option: D) The tolerance level for risk in pursuit of objectives
Rationale: Risk appetite defines the amount and type of risk that an organization is
prepared to pursue or retain. It helps guide decision-making and risk management
strategies, ensuring that the organization takes calculated risks aligned with its
objectives.
Question 3: Which of the following is a key component of the SWOT analysis?
A) Weaknesses
B) Opportunities
C) Financial projections
D) Market share
,Correct Option: B) Opportunities
Rationale: SWOT analysis includes Strengths, Weaknesses, Opportunities, and
Threats. Opportunities refer to external factors that the organization can exploit to its
advantage, making it essential for strategic planning.
Question 4: What is the primary function of financial management?
A) To manage human resources
B) To ensure regulatory compliance
C) To manage the organization's financial resources effectively
D) To develop marketing strategies
Correct Option: C) To manage the organization's financial resources effectively
Rationale: Financial management focuses on planning, organizing, directing, and
controlling financial activities. Its main goal is to maximize shareholder value while
ensuring the organization's financial health.
Question 5: Which financial ratio is commonly used to assess a company's
liquidity?
A) Debt to equity ratio
B) Return on equity
C) Price to earnings ratio
D) Current ratio
Correct Option: D) Current ratio
Rationale: The current ratio measures a company’s ability to pay short-term
obligations. It is calculated by dividing current assets by current liabilities, indicating
liquidity position.
Question 6: In strategic planning, what does the term 'mission statement' refer to?
A) A detailed financial plan
B) A list of company goals
C) A statement of the organization's purpose and values
D) A competitive analysis
Correct Option: C) A statement of the organization's purpose and values
Rationale: A mission statement defines the organization's reason for existence,
outlining its core values and purpose, guiding decision-making and strategic planning.
,Question 7: What does the term 'diversification' mean in a business context?
A) Focusing on a single product line
B) Expanding into new markets or products
C) Reducing operational costs
D) Spreading investments across various sectors
Correct Option: D) Spreading investments across various sectors
Rationale: Diversification involves entering new markets or developing new products to
reduce risk and increase opportunities for growth, spreading investments to mitigate
financial exposure.
Question 8: Which of the following best describes 'capital budgeting'?
A) The process of managing day-to-day expenses
B) The assessment of long-term investment opportunities
C) The evaluation of operational efficiency
D) The allocation of resources for long-term projects
Correct Option: D) The allocation of resources for long-term projects
Rationale: Capital budgeting is the process of planning and managing a firm’s long-
term investments. It involves evaluating potential expenditures or investments that are
significant in amount.
Question 9: What is the role of a strategic leader?
A) To manage daily operations
B) To enforce compliance regulations
C) To create and communicate a vision for the future
D) To allocate financial resources
Correct Option: C) To create and communicate a vision for the future
Rationale: Strategic leaders are responsible for defining the vision and direction of the
organization, motivating and guiding teams to achieve long-term objectives.
Question 10: In which phase of the risk management process is risk mitigation
primarily addressed?
A) Risk identification
B) Risk response
C) Risk assessment
D) Risk monitoring
, Correct Option: B) Risk response
Rationale: The risk response phase involves developing strategies to reduce or
eliminate risks, including risk avoidance, reduction, sharing, or acceptance.
Question 11: Which financial statement provides a snapshot of a company's
financial position at a specific point in time?
A) Income statement
B) Balance sheet
C) Cash flow statement
D) Statement of retained earnings
Correct Option: B) Balance sheet
Rationale: The balance sheet presents the company’s assets, liabilities, and equity at a
specific point in time, providing insights into its financial stability.
Question 12: What is the primary goal of risk assessment?
A) To eliminate all risks
B) To create a risk management plan
C) To identify and evaluate risks
D) To develop financial forecasts
Correct Option: C) To identify and evaluate risks
Rationale: Risk assessment involves identifying potential risks to the organization and
evaluating their impact and likelihood, providing necessary information for effective risk
management.
Question 13: What does 'market segmentation' involve?
A) Creating a single marketing strategy for all customers
B) Ignoring customer preferences
C) Dividing a market into distinct groups of buyers
D) Tailoring marketing strategies to specific customer segments
Correct Option: D) Tailoring marketing strategies to specific customer segments
Rationale: Market segmentation allows businesses to identify and target specific
groups within the broader market, enhancing effectiveness by catering to the unique
needs of each segment.
Question 14: In financial management, what is 'working capital'?
