CMA Part 2 Exam questions on Corporate Finance

About this course

This is a review of the major concepts of Corporate Finance that will be tested by The IMA on the Part 2 exam. The learning outcomes that The IMA will test are presented along with the analysis of those learning outcomes. What Is Corporate Finance?Corporate finance is the division of finance that deals with how corporations deal with funding sources, capital structuring, and investment decisions. Corporate finance is primarily concerned with maximizing shareholder value through long and short-term financial planning and the implementation of various strategies. Corporate finance activities range from capital investment decisions to investment banking.KEY TAKEAWAYSCorporate finance is often associated with a firm's decision to undertake capital investments and other investment-related decisions.Corporate finance manages short-term financial decisions that affect operations.In addition to capital investments, corporate finance deals with sourcing capital.Corporate finance tasks include making capital investments and deploying a company's long-term capital. The capital investment decision process is primarily concerned with capital budgeting. Through capital budgeting, a company identifies capital expenditures, estimates future cash flows from proposed capital projects, compares planned investments with potential proceeds, and decides which projects to include in its capital budget.Making capital investments is perhaps the most important corporate finance task that can have serious business implications. Poor capital budgeting (e.g., excessive investing or under-funded investments) can compromise a company's financial position, either because of increased financing costs or inadequate operating capacity.