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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. Costs that fluctuate with the level of production and sales.






2. The sum of the sample observations - divided by the sampfe size.






3. An extra return that compen-sates investors for the risk of loss relative to an investment's fair value if the investment needs to be converted to cash quickly.






4. Commercial and investmentbanks that make markets in derivatives.






5. An inventory account-ing method that identifies which specific inventory items were sold and which remained in inventory to be carried over to later periods.






6. A bias caused by using information that was not available on the test date.






7. The difference between reported net income on an accrual basis and the cash flows from operating and investing activities.






8. A swap in which the notional principal changes according to a for-mula related to changes in the underlying.






9. A multifactor model In which statistical methods are applied to a set of historical returns to determine portfolios that best explain either historical return covariances or vanances.






10. Income approach that values an asset based on estimates of future cash flows discounted to present value by using a discount rate reflective of the risks associated wi th the cash flows.






11. The percentage of a market that a particular fi rm supplies; used as the primary measure of monopoly power.






12. A graph of a frequency distri-bution obtained by drawing straight lines join-ing successive points representing the class frequencies.






13. The arithmetic mean value of a population; the arithmetic mean of all the obser-vations or values in the population.






14. Quantiles that divide a distribution into 10 equal parts.






15. With reference to assets - the amount of cash or cash equivalents that would have to be paid to buy the same or an equivalent asset today; with reference to liabilities - the un discounted amount of cash or cash equivalents that would be required to






16. A qualitative-dependent-variable multi-ple regression model based on the logistic proba-bility distribution.






17. The return on an asset in excess of the asset's required rate of return; the risk-adjusted return.






18. A specialized computer program or a spreadsheet that solves for the portfolio weights that will result in the lowest risk for a specified level of expected return.






19. The difference between the actual value per share and the no-growth value per share.






20. A cost that has already been incurred.






21. The difference between revenue and expenses; what remains after subtracting all expenses (including depreciation - interest - and taxes) from revenue.






22. A type of finance lease - from a lessor perspective - where the present value of the lease payments (lease receivable) exceeds the carrying value of the leased asset. The revenues earned by the lessor are operating (the profit on the sale) and financ






23. The normal density with mean equal to 0 and standard deviation (0') equal to l.






24. A measure of goodness-of-fit of a regres-sion that is adjusted for degrees of freedom and hence does not automatically increase when another independent variable is added to a regression.






25. The portion of the minimum-variance frontier beginning with the global mmlmum-variance portfolio and continuing above it; the graph of the set of portfolios offering the maximum expected return for their level of variance of return.






26. 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.






27. An approach to investing thatfocuses on the individual characteristics of securi-ties rather than on macroeconomic or overall market forecasts.






28. A measure of disper-sion relating to a population in the same unit of measurement as the observations - calculated as the positive square root of the population variance.






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






30. A financial statement that reconciles beginning-of-period and end-of-period balance sheet values of cash; consists of three parts: cash flows from oper-ating activities - cash flows from investing activities - and cash flows from financing activities






31. The risk of loss caused by a counterparty's or debtor's failure to make a promised payment.






32. 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.






33. The proportion of a company's assets that is financed with long-term debt.






34. A company without positive expected net present value projects.






35. A random variable that can take on at most a countable number of possi-ble values.






36. The line with an inter-cept point equal to the risk-free rate that is tangent to the efficient frontier of risky assets; represents the efficient frontier when a risk-free asset is available for investment.






37. An entity (partnership - corporation - or other legal form) where control is shared by two or more entities called venturers.






38. A stage of growth in which the com-pany reaches an equilibrium in which investment opportunities on average just earn their opportu-nity cost of capital.






39. The analyst'S estimate of a stock's value at a particular point in the future .






40. Earnings for a given time period - minus a deduction for common shareholders' opportunity cost in generating the earnings.






41. The market in which the currency of one country is exchanged for the cur-rency of another.






42. A model of stock val-uation that views a stock's intrinsic value as the present value of expected future free cash flows to equity.






43. The amount charged for the delivery of goods or services in the ordinary activities of a business over a stated period; the inflows of eco-nomic resources to a company over a stated period.






44. A type of subsidiary engaged in derivatives trans-actions that is separated from the parent company in order to have a higher credit rating than the parent company.






45. Future benefits promised to the employee regardless of continuing service. Bene-fits typically vest after a specified period of service or a specified period of service combined with age.






46. A number between 0 and 1 describing the chance that a stated event will occur.






47. Unex-pected earnings per share divided by the standard deviation of unexpected earnings per share over a specified prior time period.






48. A regression estimation technique that addresses heteroskedasticity of the error term.






49. An option strategy involving the purchase of a Rut and a call wi th the same exercise price. A straddle is based on the expectation of high volatili ty of the underlying.






50. A loan in which the borrower receives a sum of money at the start and pays back the entire amount with interest in a single pay-ment at maturity.