CFIN FINAL PAPER TESTED QUESTIONS
WITH VERIFIED ANSWERS COMPLETE
STUDY SHEET
●● Working capital management (WCM)
Answer: study and management of short-term assets and liabilities
●● Capital budgeting
Answer: is the process of determining which long-term or fixed assets to
acquire to maximize shareholder value.
●● Capital structure
Answer: is the process by which managers focus more specifically on
long-term debt and increasing shareholder wealth
●● Investments
Answer: are products and processes used to create and grow wealth
●● Financial markets and institutions:
Answer: are the firms and regulatory agencies that oversee our financial
system
, ●● Financial Industry Regulatory Authority (FINRA):
Answer: formed in 2007 to consolidate and replace existing regulatory
bodies.
●● Securities Investor Protection Corporation (SIPC)
Answer: is a nonprofit corporation created by an act of Congress to
protect the clients of brokerage firms that declare bankruptcy
●● Default risk
Answer: chance that the issuer will fail to make the required payment.
●● Inflation risk:
Answer: occurs when investors have less purchasing power from the
realized cash flows from an investment due to rising prices or inflation.
●● Diversifiable risk
Answer: (unsystematic risk) occurs when investors hold individual
securities or smallish portfolios and bear the risk that a larger, more
well-rounded portfolio could eliminate.
●● Non-diversifiable risk
Answer: systematic risk, is what remains after portfolio diversification
has eliminated unnecessary diversifiable risk
WITH VERIFIED ANSWERS COMPLETE
STUDY SHEET
●● Working capital management (WCM)
Answer: study and management of short-term assets and liabilities
●● Capital budgeting
Answer: is the process of determining which long-term or fixed assets to
acquire to maximize shareholder value.
●● Capital structure
Answer: is the process by which managers focus more specifically on
long-term debt and increasing shareholder wealth
●● Investments
Answer: are products and processes used to create and grow wealth
●● Financial markets and institutions:
Answer: are the firms and regulatory agencies that oversee our financial
system
, ●● Financial Industry Regulatory Authority (FINRA):
Answer: formed in 2007 to consolidate and replace existing regulatory
bodies.
●● Securities Investor Protection Corporation (SIPC)
Answer: is a nonprofit corporation created by an act of Congress to
protect the clients of brokerage firms that declare bankruptcy
●● Default risk
Answer: chance that the issuer will fail to make the required payment.
●● Inflation risk:
Answer: occurs when investors have less purchasing power from the
realized cash flows from an investment due to rising prices or inflation.
●● Diversifiable risk
Answer: (unsystematic risk) occurs when investors hold individual
securities or smallish portfolios and bear the risk that a larger, more
well-rounded portfolio could eliminate.
●● Non-diversifiable risk
Answer: systematic risk, is what remains after portfolio diversification
has eliminated unnecessary diversifiable risk
