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In every area of financial management, the financial manager is always faced with the dilemma of liquidity versus profitability (also known as the Risk-Return tradeoff).

In every area of financial management, the financial manager is always faced with the dilemma of liquidity versus profitability (also known as the Risk-Return tradeoff).

Discuss with examples, what the statement means with respect to Investment and Financing decisions for a firm.

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