CFIN UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS COMPLETE STUDY GUIDE FULL SOLUTION.pdf

CFIN UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS COMPLETE STUDY
GUIDE FULL SOLUTION

●● Value
Answer: The present value of all future cash flows expected to be
generated by an asset.


●● Management of Assets
Answer: The process of acquiring, maintaining, and trading investments
to maximize wealth and meet financial goals.


●● Why Raise Capital
Answer: To fund operations, invest in new projects, or expand the
business when internal cash is insufficient.


●● Debt Capital (Pros/Cons)
Answer: Pro: Tax-deductible interest and no loss of ownership. Con:
Mandatory interest payments and increased bankruptcy risk.


●● Equity Capital (Pros/Cons)
Answer: Pro: No mandatory payments and less financial risk. Con:
Dilutes ownership and dividends are not tax-deductible.

, ●● Dilution
Answer: A reduction in the ownership percentage of existing
shareholders caused by the issuance of new shares.


●● Book Value
Answer: The value of an asset or company according to its balance sheet
(historical cost minus depreciation).


●● Market Value
Answer: The current price at which an asset or company can be bought
or sold in the open market.


●● Balance Sheet
Answer: A snapshot of a company's financial position, showing what it
owns (assets), what it owes (liabilities), and equity at a specific point in
time.


●● Agent is _____
Answer: Manger


●● Principal is _____
Answer: Shareholders