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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 after-tax net operating profits as a percent of total assets or capital.






2. A transaction in which a company buys back its own shares. Unlike stock dividends and stock splits - share repurchases use corporate cash.






3. The number of observations in a given interval (for grouped data) .






4. The difference between the yield on a bond and the yield on a default-free security - usu-ally a government note - of the same maturity. The yield spread is primarily determined by the mar-ket's perception of the credit risk on the bond.






5. FRA A contract in which the initial value is intentionally set at a value other than zero and therefore requires a cash payment at the start from one party to the other.






6. The graphical representation of a model of asset price dynamics in which - at each period - the asset moves up wi t probability p or down with probability (I - p).






7. A probability distribution that specifies the probabilities for a group of related random variables.






8. A procedure used primarily in futures markets in which the parties to a contract settle the amount owed daily. Also known as the daily settlement.






9. The principle that dol-lar amounts indexed at the same point in time are additive.






10. Residual income after the forecast horizon.






11. The practice of determining a model by extensive searching through a dataset for statisti-cally significant patterns.






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






13. A swap in which the floating payments have an upper limit.






14. A model for pricing options in which the underlying price can move to only one of two possible new prices.






15. 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.






16. An asset's sensitivity to a particular factor; a mea-sure of the response of return to each unit of increase in a factor - holding all other factors constant.






17. The net amount of cash provided from operating activities.






18. A process used in a deliverable forward contract in which the long pays the agreed-upon price to the short - which in turn delivers the underlying asset to the long.






19. An approach to recognizing credit losses on customer receivables in which the company waits until such time as a customer has defaulted and only then recognizes the loss.






20. Large industry groupings.






21. An esti-mate of a country's equity risk premium that is based upon the historical averages of the risk-free rate and the rate of return on the market portfolio.






22. Correlation between adj acent observations in a time ser ies.






23. A formula that expresses the equivalence or parity of spot and forward rates - after adjusting for differences in the interest rates.






24. The uncertainty associated with tax laws.






25. A tool that calculates the contri-bution to real CDP growth of each of its sources.






26. With respect to financial statement analy-sis - the ability of a company to fulfill its long-term obligations.






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






28. A valuation that sums the estimated values of each of a company's busi-nesses as if each business were an independent going concern.






29. A complete pass through the steps of a simula tion .






30. A standardized measure of systematic risk based upon an asset's covariance with the market portfolio.






31. A subset of a larger popula-tion created in such a way that each element of the population has an equal probability of being selected to the subset.






32. A sample measure of the degree of a distribution's peakedness.






33. Asset outflows not directly related to the ordi-nary activities of the business.






34. R The correlation between the actual and forecasted values of the dependent variable in a regression.






35. Amounts owed to the company from parties other than customers.






36. The difference between the third and fi rst quarti les of a dataset.






37. The earnings growth rate in a company's mature phase; an earnings growth rate that can be sustained long term.






38. The evaluation of risk-adjusted performance; the evaluation of invest-ment skill.






39. Rate of return that dis-counts future cash flows from an investment to the exact amount of the investment; the discount rate that makes the present value of an invest-ment's costs (outflows) equal to the present value of the investment's benefits (in






40. The share price at a particular point in the future.






41. A money measure of the goods and services produced within a country's borders over a stated time period.






42. 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.






43. 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.






44. An arrangement whereby a customer authorizes a debit to a demand account; typically used by companies to collect routine pay-ments for services.






45. The ratio of a set of observations' standard deviation to the observa-tions' mean value.






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






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






48. 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.






49. Cash and investments (specifi-cally cash - cash equivalents - and short-term investments) .






50. A trend in which the dependent vari-able changes at a constant rate with time.