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Free Questions › CFA › Corporate Issuers
Free CFA Corporate Issuers Practice Questions & Answers
900 exam-style Corporate Issuers questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.
100% free · No login to startQuestion 871
Which of the following is a typical bondholder protection?
Select an option first.
Correct answer: B — Restrictions on leverage
Explanation: B is correct because lenders often impose leverage limits. A is wrong because bondholders do not vote. C is wrong because dividends are for shareholders. D is wrong because only convertible bonds have conversion rights.
Question 872
Which scenario illustrates a conflict of interest between shareholders and bondholders?
Select an option first.
Correct answer: A — Shareholders want higher dividends, increasing leverage
Explanation: A is correct because higher dividends reduce cash available for debt repayment. B is wrong because bondholders do not benefit from dividends. C is wrong because lower leverage aligns with bondholder interests. D is wrong because bondholders prefer lower risk.
Question 873
Why do suppliers care about a company’s long-term stability?
Select an option first.
Correct answer: B — They invest in relationship-specific assets
Explanation: B is correct because suppliers often invest in training, customization, or design. A, C, and D are wrong because suppliers do not receive governance or ownership rights.
Question 874
Which of the following is a government’s primary interest in corporations?
Select an option first.
Correct answer: B — Ensuring compliance with laws
Explanation: B is correct because governments regulate corporate behavior. A is wrong because governments do not prioritize shareholder value. C and D are wrong because governments do not vote or set dividends.
Question 875
Why might suppliers hesitate to extend credit to a distressed company?
Select an option first.
Correct answer: B — They risk non-payment
Explanation: B is correct because distressed firms may not pay suppliers on time. **A, C, and D are unrelated to supplier credit decisions.
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Question 876
Which of the following is a government interest in corporations?
Select an option first.
Correct answer: B — Ensuring legal compliance
Explanation: B is correct because governments regulate corporate behavior. **A, C, and D are not government roles.
Question 877
Which of the following is a typical covenant imposed by lenders?
Select an option first.
Correct answer: B — Limits on additional borrowing
Explanation: B is correct because lenders often restrict leverage. **A, C, and D do not protect lenders.
Question 878
Which of the following is a key characteristic of private lenders?
Select an option first.
Correct answer: B — They often negotiate directly with management
Explanation: B is correct because private lenders negotiate terms and conditions. **A is wrong because they access private information. **C and D are incorrect because private lenders influence terms.
Question 879
Which of the following is a supplier’s primary interest?
Select an option first.
Correct answer: B — Timely payment for goods
Explanation: B is correct because suppliers want timely payment. **A, C, and D are not supplier concerns.
Question 880
Which of the following is a likely impact of strong ESG performance?
Select an option first.
Correct answer: B — Lower cost of capital
Explanation: B is correct because strong ESG reduces long-term risk. **A and D are incorrect. **C is not guaranteed.
Question 881
Which stakeholder group is most likely to demand higher dividends, increasing leverage risk?
Select an option first.
Correct answer: B — Shareholders
Explanation: B is correct because shareholders may push for higher dividends, reducing retained cash and increasing leverage. A is wrong because bondholders prefer lower leverage. C and D do not influence dividend policy.
Question 882
Which of the following is a potential benefit of strong governance practices?
Select an option first.
Correct answer: B — Lower risk of fraud
Explanation: B is correct because strong governance reduces misconduct risk. A and D are incorrect. C is not guaranteed.
Question 883
Which of the following is a likely effect of strong environmental performance?
Select an option first.
Correct answer: B — Lower long-term operational risk
Explanation: B is correct because strong environmental practices reduce risk exposure. A and D are incorrect. C is not guaranteed.
Question 884
Which of the following best describes how ESG failures affect debtholders?
Select an option first.
Correct answer: C — Debtholders may face higher credit risk and spreads
Explanation: C is correct because ESG failures increase default risk. A is extreme and not typical. B is false. D is irrelevant because debtholders do not receive dividends.
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