SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
Test your basic knowledge |
CFA Level2 Vocab
Start Test
Study First
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 P/E to-growth ratio - calculated as the stock's PI E divided by the expected earnings growth rate.
Harmonic mean
PEG
Cost of debt
Investing activities
2. A financial state-ment that reconciles beginning-of-period ana end-of-period balance sheet values of retained income; shows the linkage between the balance sheet and income statement.
Projected unit credit method
Statement of retained earnings
Leveraged buyout (LBO)
Net operating assets
3. A principle stating that the pr:obability that A or B occurs (both occur) equals he probabili ty thab A occ rs - plus the probabir ty tha~ B occurs - minus the probabil-ity that both A and B occur.
If-converted method
Flip-over pill
Intrinsic value or exercise value
Addition rule for probabilities
4. The loss in the value of an option resulting from movement of the option price toward its payoff value as the expiration day approaches.
Time value decay
Clean surplus relation
Conventional cash flow
Cross-product netting
5. In the context of inventory management - the need for inventory as part of the routine production-sales cycle.
Negative serial correlation
Logit model
Transactions motive
Sample mean
6. A market index portfolio.
Capitalized cash flow model (method)
Covered call
Passive portfolio
Weighted harmonic mean
7. Research and development costs relating to projects that are not yet completed - such as have been incurred by a company that is being acquired.
Beta
In-process research and development
Kurtosis
Reviewed fmancial statements
8. The positive square root of the variance; a measure of dispersion in the same units as the original data.
Standard deviation
Degree of total leverage
Historical method
Terminal share price
9. A floating-rate note or bond in which the coupon is adjusted to move opposite to a benchmark interest rate.
Net borrower
Inverse floater
U.S. interest rate differential
Equity
10. Approach to translating for-eign currency financial statements for consolida-tion in which all assets and liabilities are translated at the current exchange rate. The cur-rent rate method is the prevalent method of translation.
Functional currency
Tracking error
Current rate method
Binomial model
11. An estimate of the country spread (country equity premium) for a develop-ing nation that is based on a comparison of bonds yields in country being analyzed and a developed country. The sovereign yield spread is the differ-ence between a government bo
Other comprehensive income
Sovereign yield spread
Frequency polygon
Agency costs
12. 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.
Quick ratio - or acid test ratio
Enhanced derivatives products companies (EDPC)
Basic earnings per share (EPS)
Unlimited funds
13. A depreciation method tHat allocates the cost of a long-lived asset based on-actual usage during the period .
Units-of-production method
Contra account
Annuity
Antidilutive
14. The amount at which an asset or liability is valued according to account-ing principles.
Active risk squared
Type II error
Carrying amount (book value)
Active factor risk
15. A liability account for money that has been collected for goods or services that have not yet been delivered; payment received in advance of providing a good or servIce.
Unearned revenue (deferred revenue)
Descriptive statistics
Installment
Hypothesis testing
16. When a company has a single risk management group that monitors and controls all of the risk-taking activities of the organization.
Method based on forecasted fundamentals
Flip-over pill
Accounts payable
Centralized risk management or companywide risk management
17. With respect to the format of a bal-ance sheet - a format in which assets - liabilities - and equity are listed in a single column.
Exchange for physicals (EFP)
Legislative and regulatory risk
Autocorrelation
Report format
18. Heightened uncertainty regarding a company's ability to meet its various obligations because of lower or negative earnings.
Linear association
Earnings game
Financial distress
Flexible exchange rate
19. 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.
Acquisition
Regression coefficients
Cost of carry model
Standardized beta
20. The first in - first out - method of accounting for inventory - which matches sales against the costs of items of inventory in the order in which they were placed in inventory.
Other receivables
Period costs
Exercise date
FIFO method
21. The process of accumulating interest on interest.
Estimate
Compounding
Sampling distribution
Agency relationships
22. The incor-poration of production planning into inventory management. A MRP analysis provides both a materials acquisition schedule and a production schedule.
Amortization
Manufacturing resource planning (MRP)
American option
Accelerated methods of depreciation
23. With reference to an interval of grouped data - the number of observations in the interval divided by the total number of observa-tions in the sample.
Relative frequency
Qualifying special purpose entities
Variance
Active factor risk
24. A feature of futures markets in which futures prices provide valuable information about the price of the underlying asset.
Price discovery
Discrete random variable
Annuity due
Storage costs or carrying costs
25. An activity ratio equal to the number of days in the period divided by inventory turnover over the period.
Income
Node
Horizontal merger
Days of inventory on hand (DOH)
26. (Aka forward rate agreement)
Subsidiary merger
Breakeven point
Interest rate forward
Estimation
27. The condition in which supply equals demand.
Benchmark
Nondeliverable forwards (NDFs)
Equilibrium
Time series
28. A variation of VAR that reflects the risk of a company's cash flow instead of its market value.
Cash flow at risk (CFAR)
Efficient frontier
Principal
Inventory blanket lien
29. The compound rate of growth of one unit of currency invested in a port-folio during a stated measurement period; a mea-sure of investment performance that is not sensitive to the timing and amount of withdrawals or additions to the portfolio.
Installment
Time-weighted rate of return
Unidentifiable intangible
Bond-equivalent yield
30. A company's profits on its usual business activities before deducting taxes.
Periodic rate
Exports
After-tax cash flow (ATCF)
Operating profit (operating income)
31. Real CDP divided by the population.
Other comprehensive income
Real GDP per person
Earnings game
Time value of money
32. A solvency ratio measuring the number of times interest and lease payments are covered by operating income - calculated as (EBIT + lease payments) divided by (interest payments + lease payments).
Intergenerational data mining
Fixed charge coverage
LIFO layer liquidation (LIFO liquidation)
New growth theory
33. The estimation of an unknown value on the basis of two known values that bracket it - using a straight line between the two known values.
Generalized least squares
Down transition probability
Linear interpolation
Abandonment option
34. The setting of overall policies and standards in risk management
Interval scale
Cost structure
Risk governance
Variance
35. Company growth in output or sales that is achieved by making investments internally (i.e. - excludes growth achieved through mergers and acquisitions).
Organic growth
Negative serial correlation
Capital account
Liquidation
36. The after-tax net operating profits as a percent of total assets or capital.
Return on invested capital (ROIC)
Residual autocorrelations
Commercial paper
Implied yield
37. A method of account-ing in which combined companies were portrayed as if they had always operated as a single eco-nomic entity. Called pooling of interests under
Economic value added (EVA)
Top-down forecasting approach
Uniting of interests method
Parameter instability
38. Asset inflows not directly related to the ordi-nary activities of the business.
Scalper
Gains
Bond yield plus risk premium approach
Value investors
39. Businesses with high sensitivity to business- or industry-cycle influences.
Initial public offering (IPO)
Grant date
Cyclical businesses
Prior probabilities
40. Momentum indicators based on price.
Joint venture
Synthetic forward contract
Direct f'mancing lease
Technical indicators
41. The actual cash that would be avail-able to the company's investors after making all investments necessary to maintain the company as an ongoing en terprise (also referred to as free cash flow to the firm); the internally generated funds that can be
Sharpe ratio
Free cash flow
Gross income multiplier (GIM)
Rent seeking
42. Amount that must be set aside each period to have $1 at some future point in time.
Unconditional heteroskedasticity
Equity swap
Storage costs or carrying costs
Sinking fund factor
43. 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
Current cost
Simulation
Clean surplus accounting
Aging schedule
44. Selling a product in slightly altered forms to different groups of consumers.
Quick ratio - or acid test ratio
Versioning
Arrears swap
NPV rule
45. A random variable for which the range of possible outcomes is the real line (all real numbers between (-00 and +(0) or some subset of the real line.
Securities offering
Seats
Continuous random variable
Agency costs of equity
46. A transaction in which a position in the underlying is protected by buying a put and selling a call with the premium from the sale of the call offsetting the premium from the purchase of the put. It can also be used to protect a floating-rate borrowe
Normal backwardation
Zero-cost collar
Foreign currency transactions
Mutually exclusive events
47. With reference to equity investors - investors whose investment disciplines cannot be clearly categorized as value or growth.
Unearned fees
Adjusted present value (APV)
Current rate method
Market-oriented investors
48. A forward contract calling for one party to make a fixed interest payment and the other to make an interest pay-ment at a rate to be determined at the contract expiration.
Forward rate agreement (FRA)
Arbitrage
Time series
Net operating profit less adjusted taxes - or NOPLAT
49. The interest earned each period on the original investment; interest calculated on the principal only.
Investment value
Semideviation
Simple interest
Cross-sectional data
50. The expected return in excess of the risk-free rate for a portfolio with a sensitivity of 1 to one factor and a sensitivity of 0 to all other factors.
Poison puts
Earnings game
Earnings management activity
Factor risk premium (or factor price)