CFA® Level I Exam Corporate Issuers Practice Questions

What our corporate finance questions cover

• Organizational forms, public vs private ownership and the interests of debt and equity holders
• Corporate governance: principal–agent conflicts, board structure and shareholder mechanisms; ESG considerations
• Working capital, the cash conversion cycle, liquidity sources and the cost of trade credit
• Net present value, internal rate of return, return on invested capital and real options
• The weighted average cost of capital, Modigliani–Miller, the trade-off theory and the pecking order
• Operating and financial leverage, and business models

This list is our own summary of the topic, written for practice. The official topic outline and learning outcomes are published by CFA Institute for registered candidates. The 2026 curriculum called this topic Corporate Issuers.

Ideas the questions test most

1. Accept a project when its net present value is positive. When NPV and IRR rank mutually exclusive projects differently, choose by NPV.
2. With no taxes, Modigliani–Miller says capital structure does not change firm value. With taxes, debt adds value through the interest tax shield, until the costs of financial distress offset it (the static trade-off theory).
3. The pecking order theory says managers prefer internal funds, then debt, then new equity, because issuing equity signals that shares may be overvalued.
4. The cash conversion cycle is days of inventory plus days of receivables minus days of payables.
5. Forgoing a 2/10 net 30 discount costs about 44.6% a year when compounded: (1 + 2/98)^(365/20) − 1.

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Common questions

More Level I topics

• Ethical and Professional Standards · 10–15%
• Quantitative Methods · 11–14%
• Economics · 6–9%
• Financial Statement Analysis · 11–14%
• Equities · 11–14%
• Fixed Income · 11–14%
• Derivatives and Risk Management · 6–9%
• Alternative Investments · 6–9%
• Portfolio Construction · 8–12%