ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -There are several important factors that influence decision making. Significant factors include past experiences, a variety of cognitive biases, an escalation of commitment and sunk outcomes, individual differences, including age and socioeconomic status, and a belief in personal relevance.

Detailed explanation-2: -Some of the most common factors that influence financial decisions include age, marital status, employment status, and the number of household members. Certain factors influence financial decisions more than others.

Detailed explanation-3: -These choices can be as varied as the acquisition of resources, financing and raising assets, everyday capital, and expenditure management.

Detailed explanation-4: -Decision on Financing A financial decision includes the amount of money to be raised from various long-term funding sources such as equity shares, preference shares, debentures, bank loans, and so on. This is referred to as a funding decision. In other words, it is a decision on the company’s ‘capital structure.

Detailed explanation-5: -Nature of business: Financial decisions are influenced by the nature of the business. If a firm is engaged in manufacturing operations or in the provision of public utility services, its investment in fixed assets is large and hence the capital structure has a large share of long-term capital.