Corporate Finance Chapter 1 Quiz

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary purpose of the Study Guide for Subject CB1?

To explain the history of actuarial education

To provide practice exams for students

To guide students through their study journey (correct)

To summarize the Course Notes

What are the two main parts of the Study Guide?

Introduction and course references

General information and specific Subject CB1 information (correct)

Core Principles and exam strategies

General information and practice questions

What should students do before reading the Course Notes for Subject CB1?

Read the exam syllabus

Discuss with peers

Take a practice exam

Carefully read the Study Guide (correct)

Who is the intended audience for the Study Guide?

Individuals studying for Subject CB1 exams Signup and view all the answers

In what year was the Study Guide for Subject CB1 created?

2019 Signup and view all the answers

What should be included in a study plan to enhance its effectiveness?

Time for relaxation and contingencies Signup and view all the answers

When is it recommended to complete the courses before an exam?

At least a month before the exam Signup and view all the answers

Which of the following strategies should be avoided during study sessions?

Reviewing previously understood concepts Signup and view all the answers

What is the primary goal of structuring revision effectively?

To concentrate on important and difficult areas Signup and view all the answers

Which resource is suggested to get additional study tips from other students?

The discussion forum accessible via the website Signup and view all the answers

What is one benefit of attempting assignments under exam conditions?

It mimics the behavior during real exams. Signup and view all the answers

Why is it beneficial to receive feedback on assignments marked under exam conditions?

It shows how to improve performance under exam pressure. Signup and view all the answers

What is the primary goal of financial management in a company?

Maximization of shareholder wealth Signup and view all the answers

How can the knowledge of submitting an assignment under exam conditions impact studying?

It encourages thorough study of all parts of the material. Signup and view all the answers

Which of the following describes the relationship between finance and an organization’s resources?

Finance helps in allocating resources toward achieving objectives. Signup and view all the answers

What is recommended to identify weaknesses before the real exam?

Sitting a mock exam four to six weeks beforehand. Signup and view all the answers

What is a key issue related to the maximization of shareholder wealth?

Agency problems and divergent objectives. Signup and view all the answers

Which resource can provide additional study techniques for students?

The Student Handbook available online. Signup and view all the answers

Why is it suggested to write down answers before consulting provided solutions?

It helps to strengthen memory recall. Signup and view all the answers

What distinguishes loan capital from share capital?

Share capital represents ownership, and loan capital is a debt obligation. Signup and view all the answers

What aspect does sitting a mock exam primarily help to improve?

Familiarity with the exam layout. Signup and view all the answers

Which characteristic differentiates private companies from public ones?

Private companies cannot issue shares to the public. Signup and view all the answers

How can attempting assignments more quickly be beneficial?

It promotes efficient time management under pressure. Signup and view all the answers

What is one characteristic of financial futures that non-financial companies might use?

They allow companies to hedge against price fluctuations. Signup and view all the answers

How does a rights issue benefit existing shareholders?

It allows shareholders to purchase additional shares at a discounted rate. Signup and view all the answers

Which method of obtaining a quotation for securities involves accepting bids from multiple investors?

Offer for sale by tender Signup and view all the answers

What is a primary factor influencing a company's dividend policy?

The existing capital structure and market expectations. Signup and view all the answers

How does taxation influence a company's capital structure decisions?

Tax-deductible interest on debt can make it more attractive. Signup and view all the answers

Study Notes

Introduction

Study guide is split into two parts
- Part 1: General information about Core Principles subjects
- Part 2: Specific information about Subject CB1
Refer to the guide throughout your Subject CB1 journey

Overall study plan

Develop a realistic study plan, including time for relaxation and contingencies
Be aware of busy times at work
Stick to your study plan

Study sessions

Only do activities that will increase your chance of passing
Avoid activities for the sake of it
Do not spend time reviewing material you already understand
Focus on getting on top of material you find difficult

Chapter 1: Introduction to Corporate Finance

1.2: Describe the key principles of corporate governance and the regulation of companies.
1.3: Demonstrate an awareness of the key principles of finance.
- 1.3.1: Outline the relationship between finance and the real resources and objectives of an organisation.
- 1.3.2: Outline the relationship between the stakeholders in an organisation (including lenders and investors).
- 1.3.3: Outline the role and effects of the capital markets.
- 1.3.4: Outline the maximisation of shareholder wealth as the main goal of financial management in a company.
- 1.3.5: Outline problems relating to the maximisation of shareholder wealth in practice: social responsibility concerns, agency problems and divergent objectives.
- 1.3.6: Outline the strategies employed by managers to maximize shareholder wealth.
- 1.3.7: Outline the determinants of value and the actions managers can take to influence value.

Chapter 2: How corporates are financed

2.1: Describe the structure of a company and the different methods by which it may be financed.
- 2.1.1: Outline the distinctive characteristics of sole traders, partnerships and limited companies as business entities.
- 2.1.2: Describe the different types of loan and share capital.
- 2.1.3: Contrast authorised and issued share capital.
- 2.1.4: Discuss the economic advantages and disadvantages of a limited company as a business entity.
- 2.1.5: Outline the main differences between a private and public company.

2.1.2: Describe the different types of loan and share capital.
2.1.3: Contrast authorised and issued share capital.

Chapter 5: New Issues

2.3.4: Outline the following methods of obtaining a quotation for securities:
- Offer for sale
- Offer for sale by tender
- Offer for subscription
- Placing
- Introduction
2.3.5: Describe the following types of new issues to existing shareholders:
- Scrip issue
- Rights issue
2.3.6: Describe the role of underwriting in the issue of securities.

Chapter 8: Financial Instruments

2.3.3: Describe the characteristics and possible uses by a non-financial company of:
- Financial futures
- Options
- Interest rate and currency swaps.

Chapter 20: Capital Structure and Dividend Policy

2.4: Discuss the factors to be considered by a company when deciding on its capital structure and dividend policy.
- 2.4.1: Describe the effect that the capital structure used by a company will have on the market valuation of the company.
- 2.4.2: Describe the effect of taxation on the capital structure used by a company.
- 2.4.3: Discuss the principal factors that a company should consider in setting dividend policy.
- 2.4.4: Discuss alternative ways of distributing profits, such as buybacks.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Assess your understanding of key principles in corporate finance as introduced in Chapter 1. This quiz covers corporate governance, finance principles, and their relationship to an organization's objectives. Prepare to demonstrate your knowledge and enhance your study for Subject CB1.