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CFA Level2 Vocab

Subjects : certifications, cfa
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. With reference to cash flow statements - a format for the presenta-tion of the statement which - in the operating cash flow section - begins with net income then shows additions and subtractions to arrive at operatingcash flow.

2. A measure of the expected annual cash flow from the operation of a real estate investment after all expenses but before taxes.

3. The volatility that option traders use to price an option - implied by the price of the option and a particulau option-pricing model.

4. A criterion asserting that the optimal portfolio is the one that minimizes the probability that portfolio return falls below a threshold level.

5. A portfolio having factor sensitiv-ities that are matched to those of a benchmark or other portfolio.

6. Long-term assets with physical sub-stance that are used in company operations - such as land (property) - plant - and equipment.

7. The number of indepen-dent observations used.

8. All members of a specified group.

9. Options that - if exercised - would result in the value received being worth more than the payment required to exercise.

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

11. Sales minus the cost of sales ~.e . - the cost of goods sold for a manufactur-ing cOlp pany) .

12. 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.

13. The price paid to buy an asset.

14. An acquisition in which the acquirer gives the target company's shareholders some combination of cash and securities in exchange for shares of the target company's stock.

15. The process of identifYing the level of risk an entity wants - measuring the level of risk the entity currently has - taking actions that bring the actual level of risk to the desired level of risk - and monitoring the new actual level of risk so tha

16. An estimate of the average time that elapses between paying suppliers for materi-als and collecting cash from the subsequent sale of goods produced.

17. The process of using an option to buy or sell the underlying.

18. Instruments that payinterest as the difference between the amountborrowed and the amount paid back.

19. Additional margin that must be deposited in an amount sufficient to bring the balance up to the initial margin requirement.

20. A measure of correlation applied to ranked data.

21. A pre-offer takeover defense mechanism that makes it prohibitively costly for an acquirer to take control of a target without the prior approval of the target's board of directors.

22. Financial instru-ments that an entity chooses to measure at fairvalue per lAS 39 or SFAS 159. Generally - the elec-tion to use the fair value option is irrevocable.

23. The currency in which finan-cial statement amounts are presented.

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

25. An option strategy in which a position in an asset is converted to a risk-free position with a position in a specific number of options. The number of options per unit of the underlying changes through time - and the position must be revised to maint

26. When a company has a single risk management group that monitors and controls all of the risk-taking activities of the organization.

27. An ordered listing.

28. CreaLing a contrac t with standard and generally accepted terms - which makes it moreacceptable to a broader group of participants.

29. A reserve created against deferred tax assets - based on the likelihood of realizing the deferred tax assets in future account-ing periods.

30. A depreciation method that allocates evenly the cost of a long-lived asset less its estimated residual value over the estimated useful life of the asset.

31. To sell the assets of a company - division - or subsidiary piecemeal - typically because of bank-ruptcy; the form of bankruptcy that allows for the orderly satisfaction of creditors' claims after which the company ceases to exist.

32. Agreements made by a company in bankruptcy under which a company's capital struc-ture is altered and/ or alternative arrangements are made for debt repayment; U.S. Chapter II bankruptcy. The company emerges from bank-ruptcyas a going concern.

33. The quantity of goods and services that a country exports to pay for its imports of goods and services.

34. The use of computer networks to conduct financial transactions electronically.

35. When settling a contract - the risk that one party could be in the process of paying the counterparty while the counterparty is declar-ing bankruptcy.

36. A transformation that subtracts the value of the time series in period t - 1 from its value in period t.

37. An increment or premium to value associated with a controlling ownership interest in a company.

38. For a give period - equal to begi ning inventory minus entling inventory JDlusthe cost 0 goods auqui red or produced duringthe period.

39. Costs associated with the conflict of interest present when a company is managed by non-owners. Agency costs result from the inher-ent conflicts of interest between managers and equity owners.

40. The relationship amongputs - calls - and forward contracts.

41. A quantity whose future outcomes are uncertain.

42. Total company valme (the market value of debt - common equity - and preferred equity) minus the value of cash and investments.

43. A bar chart of data that have been grouped into a frequency distribution.

44. A form ofcommon-size analysis in which the accounts in agiven period are used as the benchmark or baseperiod - and every account is restated in subse-quent periods as a percentage of the base period'ssame account.

45. A legal contract specifYing the terms of a bond issue.

46. A random variable hav-ing the outcomes 0 and 1.

47. Management's focus on reporting earnings that meet consensus estimates.

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

49. Describes a distribution that is less peaked than the normal distribution.

50. A normal operating expense that has been paid in advance of when it is due.