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CFA Level2 Vocab

Subjects : certifications, cfa
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. With reference to statistical infer-ence - the subdivision dealing with the testing ofhypotheses about one or more populations.






2. Increases in economic benefits in the form of inflows or enhancements of assets - or decreases of liabilities that result in an increase in equity (other than increases resulting from contribu-tions by owners) .






3. A probability based on logical analysis rather than on observation or personal judgment.






4. The establishment of objectives for individuals - groups - or divisions of an organiza-tion that takes into account the allocation of an acceptable level of risk.






5. The graphical representation of a model of asset price dynamics in which - at each period - the asset moves up wi t probability p or down with probability (I - p).






6. The residuals from a fitted time-series model within the sample period used to fit the model.






7. A company's operating profit with adjustments to normalize the effects of capital structure.






8. The risk attributed to the operating cost structure - in particular the use of fixed costs in operations; the risk arising from the mix of fixed and variable costs; the risk that a company's operations may be severely affected by environ-mental - soc






9. The restatement of financial statement items using a common denominator or reference item that allows one to identify trends and major differences; an example is an income statement in which all items are expressed as a percent of revenue.






10. A public document that provides the material facts concerning matters on which shareholders will vote.






11. Accounting method in which the only relevant transactions for the financial statements are those that involve cash.






12. A subset of a larger popula-tion created in such a way that each element of the population has an equal probability of being selected to the subset.






13. Securities held by a company with the intent to trade them.






14. Common-size analysis using only one reporting period or one base financial state-ment; fo r example - an income statement in which all items are stated as percentages of sales.






15. An approach to valuing natu-ral resource companies that estimates company value on the basis of the market value of the natu-ral resources the company controls.






16. A method for accounting forthe effect of convertible securities on earnings pershare (EPS) that specifies what EPS would havebeen if the convertible securities had been con-verted at the beginning of the period - taking account of the effects of conv






17. Aka 'Market efficiency. '






18. The principle that dol-lar amounts indexed at the same point in time are additive.






19. An extra return that compen-sates investors for the possibility that the borrower will fail to make a promised payment at the con-tracted time and in the contracted amount.






20. An investment decision rule that accepts projects or investments for which the IRR is greater than the opportunity cost of capital.






21. An ordered listing.






22. A mean computed after excluding a stated small percentage of the lowest and highest observations.






23. The relationship between the price of the underlying and an option's exercise price.






24. An international organi-zation that places greater obligations on its mem-ber countries to observe the GATT rules.






25. Method used to estimate the overall capitalization rate by dividing the sale price of a comparable income property into the net operating income.






26. The periodic investment of a fixed amount of money.






27. Financial statements in which all elements (accounts) are stated as a per-centage of a key figure such as revenue for an income statement or total assets for a balance sheet.






28. A set of observations on a variable's out-comes in different time periods.






29. A poison pill takeover defense that dilutes an acquirer's ownership in a target by giv-ing other existing target company shareholders the right to buy additional target company shares at a discount.






30. The average return in excess of the risk-free rate divided by the standard deviation of return; a measure of the average excess return earned per unit of standard deviation of return.






31. A rule explaining the expected value of a random vari-able in terms of expected values of the random variable conditional on mutually exclusive and exhaustive scenarios.






32. Regulation that seeks to keep the rate of return in the industry at a com-petitive level by not allowing excessive prices to be charged.






33. The allocation of funds to rela-tively long-range projects or investments.






34. Method of managing inventory that minimizes in-process inventory stocks. kth order autocorrelation The correlation between observations in a time series separated by k periods.






35. Under U.S. GAAP - a measure used in estimating a defined-benefit pen-sion plan's liabilities - defined as 'the actuarial present value of benefits (whether vested or non-vested) attributed by the pension benefit formula to employee service rendered b






36. A swap in which the underlying is a commodity such as oil - gold - or an agricultural product.






37. A function with non-negative values such that probability can be described by areas under the curve graphing the function.






38. With reference to fundamental factor models - the value of the attribute for an asset minus the average value of the attribute across all stocks - divided by the standard deviation of the attribute across all stocks.






39. The calculation of returns in a logical and consistent manner.






40. Costs of inven tories including costs of purchase - costs of conversion - other costs to bring the inventories to their present location and condition - and the allocated portion of) fixed production overhead costs.






41. The average rate of return in excess of the risk-free rate.






42. An algorithm that pro-duces uniformly distributed random numbers between 0 and 1.






43. Unearned fees are recognized when a company receives cash payment for fees prior to earning them.






44. The absorption of one company by another; two companies become one entity and one or both of the pre-merger companies ceases to exist as a separate entity.






45. The first date that a share trades without (i.e. - 'ex') the dividend.






46. Unsecured short-term corporate debt that is characterized by a single payment at maturity.






47. A dividend payout pol-icy under which earnings in excess of the funds necessary to finance the equity portion of com-pany's capital budget are paid out in dividends.






48. The currency in which finan-cial statement amounts are presented.






49. The volatility that option traders use to price an option - implied by the price of the option and a particulau option-pricing model.






50. Long-term assets with physical sub-stance that are used in company operations - such as land (property) - plant - and equipment.