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Basic Question 0 of 13

Which of the following statements is correct?

I. Capital allocation process is the process of choosing the types of debt and equity that will be used to finance investment projects.
II. Capital allocation process is the process of scheduling and managing the short-term cash flows of a firm.
III. Capital allocation process is the process of analyzing projects and deciding which ones to accept.

User Contributed Comments 4

User Comment
MRSLETS got it
DonAnd Capital budgeting is the process that companies use for decision making on capital projects
fabsan I = Capital structure decision
II = Working capital management decision
JLWM Thanks for the clarification fabsan !
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Colin Sampaleanu

Colin Sampaleanu

Learning Outcome Statements

calculate and interpret the present value(PV) of fixed-income and equity instruments based on expected future cash flows

calculate and interpret the implied return of fixed-income instruments and required return and implied growth of equity instruments given the present value (PV) and cash flows

CFA® 2025 Level I Curriculum, Volume 1, Module 2.