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CFA L1 > Corporate Finance > Flashcards

Corporate Finance Flashcards

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CFA flashcards
1
Q

Collaterals

A

Assets or financial guarantees underlying a debt obligation that are above and beyond the issuers promise to pay.

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2
Q

Controlling Shareholders

A

A particular shareholder or block of shareholders holding a percentage of shares that gives them significant voting power.

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3
Q

Corporate Governance

A

The system of internal controls and procedures by which individuals companies are managed

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4
Q

Covenants

A

Terms and conditions of lending agreements that the issuer must comply with

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5
Q

Cumulative Voting

A

A voting process whereby each shareholder can accumulated and vote all his or her shares for a single candidate in an election, as opposed to having to allocated their voting right evenly among candidates

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6
Q

Engagement/Active Ownership

A

ESG investment style that uses shareholder to power to influence corporate behavior through direct corporate engagement (communicating with sr managements and/or board me of companies) filing or cofiling shareholder proposals, and proxy voting that is directed by ESG guidelines

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7
Q

ESG

A

An acronyms that encompasses environmental, social and governance

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8
Q

ESG Investing

A

The consideration of environmental, social, and governance factors in the investment process

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9
Q

Full integration

A

An ESG investment style that focuses on the explicit inclusion of ESG factors into the traditional financial analysis of individual stocks for the purpose of valuation (as inputs into cash flow forecasts and/or cost of capital estimates)

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10
Q

Green Bonds

A

A bond used in green finance whereby the proceeds are earmarked towards environmental-related products

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11
Q

Green Finance

A

A type of finance that addressed environmental concerns while achieving economic growth

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12
Q

Hostile takeover

A

An attempt by one entity to acquire a company without the consent of the companies management

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13
Q

Indenture

A

Legal contract that describes the form of a bond, the obligations of the issuer, and the rights of the bond holder

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14
Q

Minority Shareholders

A

A particular shareholder or block of shareholders holding a small proportion of a companies outstanding shares, resulting in a limited ability to exercise control in voting activities

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15
Q

Negative Screening

A

An ESG investment style that focuses on the exclusion of certain sectors, companies or practices in a fund or portfolio on the basis of specific ESG criteria

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16
Q

Overlay/Portfolio tilt

A

An esg investment style that focuses on the use of certain investment strategies or products to change specific aggregate ESG characteristics of a fund or investment portfolio to a desired level

17
Q

Positive Screening

A

An esg investment style that focuses on the inclusion of certain sectors, companies or practices in a fund or portfolio on the basis of specific minimum EG criteria

18
Q

Principal-Agent Relationship

A

A relationship in which a principal hires an agent to perform a particular task or service

19
Q

Proxy contest

A

Corporate takeover mechanism in which shareholders are persuaded to vote for a group seeking a controlling position on a companies board of directors

20
Q

Proxy Voting

A

A process that enables shareholders who are unable to to attend a meeting to authorize another individual to vote on their behalf

21
Q

Relative/best-in-class screening

A

An ESG investment style that focuses on sectors, companies, or projects selected for ESG performance relative to industry peers

22
Q

Responsible investing

A

The practice of identifying companies that can efficiently manage their financial environmental, and human capital resources to generate attractive long-term profitability

23
Q

Risk factor/risk premium investing

A

An ESG investment style that focuses on the inclusion of ESG information in the analysis of systematic risks as, for example, in smart vets and factor investment strategies

24
Q

Say on Pay

A

A process whereby shareholders may vote in executive remuneration (compensation) matters

25
Q

Shareholder activism

A

Strategies used by shareholders to attempt to compel a company to act in a desired manner

26
Q

Shareholder Engagement

A

The process whereby companies engage with their shareholders

27
Q

Socially responsible investing

A

An investment approach that excludes investments in companies or industries that deviate from an organizations beliefs and sometimes includes investments with favorable environmental or social profiles

28
Q

Staggered boards

A

Election process whereby directors are typically divided into multiple classes that are elected separately in consecutive years, that is one class every year

29
Q

Stakeholder management

A

The identification, prioritization, and understanding of the interests of stakeholder groups, and managing the companies relationships with these groups

30
Q

Straight Voting

A

A shareholder voting process in which shareholders receive one vote for each share owned

31
Q

Sustainable investing

A

A practice of identifying companies that can efficiently manage their financial, environmental and human capital resources to generate attractive long-term profitability

32
Q

Tender offer

A

Corporate take over mechanism which involves shareholders selling their interest directly to the group seeking to gain control

33
Q

Thematic Investment

A

An esg investing style that focuses on investing in themes or assets specifically related to ESG factors, such as clean energy, green technology, or sustainable agriculture

34
Q

Universal owners

A

Long term investors, such as pension funds, that have significant assets invested in globally diversified portfolios

CFA L1 (50 decks)

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