Cma Exam Part 2 Su4

Front 1

What is reported on a balance sheet

Back 1

assets, liabilities, equity, and investments by owners at a moment in time.

Front 2

What is reported on an income statement and statement of retained earnings?

Back 2

revenues, expenses, gains, losses, and distributions to owners over a period of time.

Front 3

What are the right and wrong ways to use the "Notes to the financial statements"

Back 3

RIght way: To amplify information and to be in accordance with GAAP.
Wrong Way: to correct improper presentations.

Front 4

Users with Direct Interests in FInancial Statements

Back 4

1) Investors or potential investors
2) Suppliers and creditors
3) Employees
4) Management

Front 5

Users with Indirect interests in Financial Statements

Back 5

1) Financial advisers and analysts
2) Stock markets or exchanges
3) Regulatory authorities

Front 6

How do internal users use financial statements

Back 6

to assess financial strengths and deficiencies, to evaluate performance results and past decisions, and to plan for future financial goals and steps toward accomplishing them.

Front 7

Indifference curve

Back 7

combinations of portfolios having equal utility to the investor.

Front 8

The steeper the indifference curve________

Back 8

the more risk averse an investor is.

Front 9

The Higher the curve...

Back 9

the greater is the investor's level of utility.

Front 10

What are the 2 most important decisions involed in managing a company's portfolio?

Back 10

1. The amount of money to invest
2. The securities in which to invest.

Front 11

Maturity Matching

Back 11

Arranging a portfolio so that the maturity of funds will coincide with the need for funds will maximize the average return on the portfolio and provide increased flexibility.

Front 12

Long Hedges

Back 12

Futures contracts that are purchased to protect against price increases.

Front 13

Short Hedges

Back 13

Futures contracts that are sold to protect against price decines