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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. Temporary differ-ences that result in a red uction of or deduction from taxal:J e income in a future period when the balance sheet item is n~ covered or settled.






2. An extra return that compensates investors for the increased sensitivity of the mar-ket value of debt to a change in market interest rates as maturity is extended.






3. A reduction in the number of shares outstanding with a corresponding increase in share price - but no change to the company's underlying fundamentals.






4. A method of revenue recog-nition in which the seller does not report anyprofit until the cash amounts paid by the buyer-including principal and interest on any financingfrom the seller-are greater than all the seller'scosts for the merchandise sold.






5. Aka 'Residual income. '






6. An estimate of a parameter that involves combining (pooling) observations from two or more samples.






7. The market for short-term debt instruments (one-year maturity or less).






8. With reference to statistical infer-ence - the subdivision dealing with the testing ofhypotheses about one or more populations.






9. A company's ability to satisfY its short-term obligations using assets that are most readily con-verted into cash; the ability to trade a futures con-tract - either selling a previously purchased contract or purchasing a previously sold contract.






10. A tax that is imposed by the importing coun-try when an imported good crosses its interna-tional boundary.






11. The correlation of a time series with its own past values.






12. For accounting purposes - the spot exchange rate on the balance sheet date.






13. The error of not rejecting a false null hypothesis.






14. A procedure by which a population is divided into subpopulations (strata) based on one or more classification criteria. Sim-ple random samples are then drawn from each stratum in sizes proportional to the relative size of each stratum in the populati






15. An electronic payment system used widely in Europe and Japan.






16. An agreement between two parties to exchange a series of future cash flows.






17. The buyer of a derivative contract. Also refers to the position of owning a derivative.






18. Assets lacking physical substance - such as patents and trademarks.






19. The difference between operat-ing assets (total assets less cash) and operating lia-bilities (total liabilities less total debt).






20. The minimum real wage rate needed to maintain life.






21. An approach to managing inve tory based on expected demand and the predictability of demand; the ordering point for new inventory is determined based on the costs of ordering and carrying inventory - such that the total cost associated with inventory






22. A means of settling payments in which the amount owed by the first party to the second is netted with the amount owed by the sec-ond party to the first; only the net difference is paid.






23. A person or organization seeking to profit by acquiring a company and reselling it - or seeking to profit from the takeover attempt itself (e.g. - greenmail).






24. The purchase of some portion of one company by another; the purchase may be for assets - a definable segment of another entity - orthe purchase of an entire company.






25. A transaction whereby the target company management team converts the target to a privately held company by using heavy borrowing to finance the purchase of the target company's outstanding shares.






26. A test in which the null hypothesis is rejected only if the evidence indicates that the population parameter is greater than (smaller than) eo- The alternative hypothesis also has one side.






27. Assets used as benchmarks when applying the method of com parables to value an asset.






28. Costs (e.g. - executives' salaries) that cannot be directly matched with the timing of rev-enues and which are thus expensed immediately.






29. Uncertainty with respect to the quantity of goods and services that a company is able to sell and the price it is able to achieve; the risk related to the uncertainty of revenues.






30. An option strategy involving the purchase of a put and sale of a call in which the holder of an asset gains protection below a certain level - the exercise price of the put - and pays for it by giving up gains above a certain level - the exercise pri






31. Approach to trans-lating foreign currency financial statements for consolidation in which monetary assets and liabil-ities are translated at the current exchange rate. Nonmonetary assets and liabilities are translated at historical exchange rates (th






32. Each component put option in a floor.






33. An option that allows the holder to buy (if a call) or sell (if a put) an underlying cur-rency at a fixed exercise rate - expressed as an exchange rate.






34. The internal rate of return on a portfol io - taking account of all cash flows.






35. 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.






36. A country that during its entire his-tory has borrowed more in the rest of the world than other countries have lent in it.






37. When disbursements are paid tooquickly or trade credit availability is limited -requiring companies to expend funds beforethey receive funds from sales that could cover theliability.






38. The graph of the set of portfolios that have minimum variance for their level of expected return.






39. The combination of calls - the underly-ing - and risk-free bonds that replicates a put option.






40. A long-term pattern of movement in a partic-ular direction.






41. With reference to grouped data - the most frequently occurring interval.






42. PIE (or forward PIE or prospective PIE) A stock's current price divided by the next year's expected earnings.






43. The time remaining in the life of a derivative - typically expressed in years.






44. Standard errors of the esti-mated parameters of a regression that correct for the presence of heteroskedastici ty in the regres-sion's error te






45. 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.






46. A record of receipts from exports of goods and services - payments for imp<ilrts of goods and services - net income and net transfers received from the rest of the world.






47. The margin requirementon the first day of a transaction as well as on anyday in which additional margin funds must be deposited.






48. The prooability of an observation - given a par ticular set of conditions.






49. Assets and liabilities with value equal to the amount of currency con-tracted for - a fixed amount of currency. Examples are cash - accounts receivable - mortgages receiv-able - accounts payable - bonds payable - and mort-gages payable. Inventory is






50. Deliberate activity aimed at influencing reporting earnings numbers - often with the goal of placing management in a favorable light; the opportunistic use of accruals to manage earnings.