Chapter 1

Question 1

Financing decisions

Answer 1

How a firm should be financed - sole by equity, or by a combination of equity and debt and in what proportions

Question 2

The dividend decision

Answer 2

Whether a firm should pay a dividend and if so how much

Question 3

Financial Strategy

Answer 3

Detailed financial decision that will support a business strategy over the short to medium term

Question 4

Stakeholder definitions

Answer 4

Someone who has an interest in the performance of a firm or who is in a position to influence decisions by the firm

Question 5

Sustainability

Answer 5

The ability to meet the needs of the present without compromising the ability of future generations to meet their own needs

Question 6

ESG

Answer 6

Set of criteria used to measure and report sustainability

Question 7

Sustainability report should include

Answer 7

Environmental factors
social factors
governance factors
climate related disclosures
policies, practices and performance
Targets

Question 8

Reasons it is difficult to quantify ESG performance

Answer 8

Choice of KPIs often subjective
Qualitative effects can be difficult to measure
KPIs that are not sufficiently specific can be hard to measure
it can be difficult to compare ESG metrics of different businesses across different industries