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CFA Level2 Vocab

Subjects : certifications, cfa
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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 annual return that an investor earns on a bond if the investor purchases the bond today and holds it until maturity.






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. Revenue that has been earned but not yet billed to customers as of the end of an accounting period.






4. The variable whose variationabout its mean is to be explained by the regres-sion; the left-hand-side variable in a regressionequation.






5. The status of a company in the sense of whether it is assumed to be a going con-cern or not.






6. The particular value calculated from sam-ple observations using an estimator.






7. A rate of return that reflects the rela-tionship between differently dated cash flows; a discount rate.






8. A minimum level of cash to be held available-estimated in advance and adjusted for known funds transfers - seasonality - or other factors.






9. A merger in which the company being purchased becomes a subsidiary of the purchaser.






10. The estimated cost of equity capital in money terms.






11. A method of accounting for abusiness combination where the acquiring com-pany allocates the purchase price to each assetacquired and liability assumed at fair value. If thepurchase price exceeds the allocation - the excessis recorded as goodwill.






12. Historical beta adjusted to reflect the tendency of beta to be mean reverting.






13. When assets trans-lated at the current exchange rate are greater in amount than liabilities translated at the current exchange rate. Assets exposed to translation gains or losses exceed the exposed liabilities.






14. The present discounted value of future cash flows: For assets - the present dis-counted value of the future net cash inflows that the asset is expected to generate; for liabilities - the present discounted value of the future net cash outflows that a






15. With reference to the presenta-tion of expenses in an income statement - the grouping together of expenses by similar nature - e.g. - all depreciation expenses.






16. The difference between reported earnings per share and expected earnings per share.






17. The problem or issue of popu-lation regression parameters that have changed over time.






18. The use of an inaccurate pricing model for a particular investment - or the improper use of the right model.






19. The accuracy with which a company's reported financials reflect its operat-ing performance and their usefulness for forecast-ing future cash flows.






20. A finan-cial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its oper-ations; equal to days of inventory on hand + days of sales outstanding - number of days of






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






22. The risk that portfolio value will fall below some minimum acceptable level over some time horizon.






23. Valuation measures and other factors related to share price or the trading characteristics of the shares - such as earn-ings yield - dividend yield - and book-to-market value.






24. A swap in which the payments are basedon the difference between interest rates in twocountries but payments are made in only a singlecurrency.






25. The number of successes in n Bernoulli trials for which the probability of success is constan t for all trials and the trials are independent.






26. 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.






27. The last in - first out - method of accounting for inventory - which matches sales against the costs of items of inventory in the reverse order the items were placed in inventory (i.e. - inventory produced or acquired last are assumed to be sold firs






28. In reference to corporate taxes - a system that imputes - or attributes - taxes at only one level of taxation. For countries using an imputation tax system - taxes on dividends are effectively levied only at the shareholder rate. Taxes are paid at th






29. ROA) A prof-itability ratio calculated as operating income divided by average total assets.






30. A balance sheet liability that arises when a deficit amount is paid for income taxes relative to accounting profit. The taxable income is less than the accounting profit and income tax payable is less than tax expense. The company expects to eliminat






31. 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






32. When liabilities translated at the current exchange rate are greater than assets translated at the current exchange rate. Liabilities exposed to translation gains or losses exceed the exposed assets.






33. A numerical measure of how sensitive an option's delta is to a change in the underlying.






34. The margin requirement on any day other than the first day of a transaction.






35. A balance sheet that does not show subtotals for current assets and current liabilities.






36. With reference to a random vari-able - the property of having characteristics such as mean and variance that are not constant through time.






37. 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.






38. Amounts that a business owes to its vendors for goods and services that were pur-chased from them but which have not yet been paid.






39. Weights that are used to compute a binomial option price. They are the probabilities that would apply if a risk-neutral investor valued an option.






40. The number of shares that would beoutstanding if all potentially dilutive claims oncommon shares (e.g. - convertible debt - convert-ible preferred stock - and employee stock options)were exercised.






41. The analysis of the strength of the linear relationship between two data series.






42. The rate of dividend (and earnings) growth that can be sustained over time for a given level of re turn on equity - keeping the capi tal structure constant and wi thout issuing addi tional common stock.






43. The probabili ty that a confi-dence interval ind udes the unknown population parameter.






44. A diagram with branches emanating from nodes representing either mutually exclu-sive chance events or mutually exclusive decisions.






45. The date that a shareholderlisted on the corporation's books will be deemedto have ownership of the shares for purposes ofreceiving an upcoming dividend; two businessdays after the ex-dividend date.






46. A record of the change in official reserves - which are the government's holdings offoreign currency.






47. An active investment strategy whereby the timing of cash outflows is not matched with investment maturities.






48. A forward contract in which the underlying is a bond.






49. P/E calculated on the basis of a forecast of EPS; a stock's current price divided by next year's expected earnings.






50. The concept that dividends paid now displace earnings in all future periods.







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