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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. The difference between the market price of the option and its intrinsic value - determined by the uncertainty of the underlying over the remaining life of the option.






2. The investigation of issues relating to the accuracy of reported accounting results as reflections of economic per-formance; quality of earnings analysis is broadly understood to include not only earnings manage-ment - but also balance sheet manageme






3. Measure of financial reporting quality by subtracting the mean or median ratio for a given sector group from a given company's ratio.






4. The amount by which the takeover price for each share of stock must exceed the current stock price in order to entice shareholders to relinquish control of the com-pany to an acquirer.






5. The amount for which one can sell some-thing - or the amount one must pay to acquire something.






6. 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.






7. A quantitative measure of skew (lack of symmetry); a synonym of skew.






8. With reference to investmentselection processes - an approach that involves selection from all securities within a specified investment universe - i.e. - without prior narrowiNg of the universe on the bas' s of macroeconomj c or overall market consid






9. The mix of a company's variable costsand fixed costs.






10. Observations that are depen-dent on each other.






11. The return that an investorearns during a specified holding period; a syn-onym for total return.






12. The distribution of all distinct possible values that a statistic can assume when computed from samples of the same size ran-domly drawn from the same population.






13. A statistical test for differ-ences based on paired observations drawn from samples that are dependent on each other.






14. Covering or containing all possible outcomes.






15. An unlimited funds environment assumes that the company can raise the funds it wants for all profitable projects simply by paying the required rate of return.






16. The difference between inventory reported as FIFO and 'nventory reported as LIFO (FIFO inventory value less LIFO inventory val e).






17. A trade in two closely related stocks that involves buying the relatively undervalued stock and selling short the relatively overvalued stock.






18. An option that gives the holder the right to sellan underlying asset to another party at a fixedprice over a specific period of time.






19. The goods and services that we sell to peo-ple in other countries.






20. With eference to grouped data - a se t or val-ues within w ich an observation falls.






21. An interest rate swap in which the notional principal is indexed to the level of interest rates and declines with the level ofinterest rates according to a predefined schedule. This type of swap is frequently used to hedge secu-rities that are prepai






22. 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.






23. Regulation that allowsprices to reflect only the actual average cost ofproduction and no monopoly profits.






24. A finance perspective on capital markets that deals with the relationship of price to intrinsic value. The traditional efficient mar-kets formulation asserts that an asset's price is the best available estimate of its intrinsic value. The rational ef






25. The expected return on equi-ties minus the risk-free rate; the premium that investors demand for investing in equities.






26. The price of a security with accrued interest.






27. The risk of a change in value of a n asset or liability denomi-nated in a foreign currency due to a change in exchange rates.






28. With reference to the error term of a regression - having a variance that differs across observations.






29. An observation drawn from a uni-form distribution.






30. Behavior on the part of a firm that allows it to comply with the letter of the law but violate the spirit - significantly lessening the law's effects.






31. An annualized return that accounts for the effect of interest on interest; EAY is computed by compounding 1 plus the holding period yield forward to one year - then subtracting 1.






32. The process of selecting - evaluat-ing - and interpreting financial data in order to formulate an assessment of a company's present and future financial condition and performance.






33. The set of rules used to select a sample.






34. A financial statement that reconciles the beginning-of-period and end-of-period balance sheet values of shareholders' equity; provides information about all factors affecting shareholders' equity.

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35. An operating segment or one level below an operating segment (referred to as a component) .






36. A type of non-audited financial statements; typically provide an opinion letter with representations and assurances by the reviewing accountant that are less than those in audited financial statements.






37. 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.






38. A merger involving the pur-chase of a target that is farther along the value or production chain; for example - to acquire a distributor.






39. Assets that can be most readily con-verted to cash (e.g. - cash - short-term marketable investments - receivables) .






40. Each value on a binomial tree from which suc-cessive moves or outcomes branch.






41. A specifi-cation of how 'value' is to be understood in the context of a specific valuation.






42. The rate of return that must be met fora project to be accepted.






43. A model of stock valuation that views intrinsic value of stock as the sum of book value per share plus the present value of the stock's expected future residual income per share.






44. A corporate transac-tion in which management repurchases all out-standing common stock - usually using the proceeds of debt issuance.






45. A trade in two closely related stocks involving the short sale of one and the pur-chase of the other.






46. The theory that managers take into account how their actions might be inter-preted by outsiders and thus order their prefer-ences for various forms of corporate financing. Forms of financing that are least visible to out-siders (e.g. - internally gen






47. A solvency ratio calculated as EBIT divided by interest payments.






48. 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.






49. The risk associated with the uncer-tainty of how derivative transactions will be regu-lated or with changes in regulations.






50. An attempt to acquire a com-pany against the wishes of the target's managers.