How are cash-based or accrual-based principles related to private and public issuers?
When analyzing fixed-income securities, issuers can be either public or private. Which of the following sentence is true according to the CFA Institute? a) Public issuers use accrual-based principles (GAAP) while private issuers use cash-based principles. b) Private issuers use accrual-based principles (GAAP) while public issuers use cash-based principles. c) Both public and private issuers
Leer más
What are the main types of capital investments in Corporate Finance?
In the Corporate Issuers (Corporate Finance) area, we define capital investments as those with a life longer than one year, so they are included in the long-term portion of balance sheets. Which of the following types of capital investments is associated to machine replacement and infrastructure improvement? a) Going Concern Projects. b) Regulatory / Compliance
Leer más
What is the main difference between the operating cycle and the net operating cycle?
When dealing with relevant periods in each company, such as the reception of inventory from suppliers, the reception of cash from clients or the payment of cash to suppliers, we define two relevant periods expressed in days, the operating cycle and the net operating cycle, what is the main difference between both cycles? a) The
Leer más
What are the main differences between debt and equity financing used by corporations?
When comparing debt financing to equity financing used by corporations, there are some key differences. Which of the following sentences represents differential characteristics of debt financing? a) Legal repayment option, discretionary payments, and finite term commitments. b) Residual asset claim, tax-deductible expenses, and finite term commitments. c) Tax-deductible expenses, legal repayment option, and finite term
Leer más
What is the difference between contract and agency relationships in corporate finance?
When analyzing the relationships between the different stakeholders in corporations, such as governments, customers, shareholders, bondholders, suppliers, managers, board of directors, and employees, we can find different types of relations, such as contractual or agency (principal-agent) relationships. Which of the following can be considered as an agency relationship? a) Managers vs. employees. b) Shareholders vs.
Leer más
