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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. A rule explaining the expected value of a random vari-able in terms of expected values of the random variable conditional on mutually exclusive and exhaustive scenarios.






2. A method of revenue recognition in which - in each accounting period - the company estimates what percentage of the contract is complete and then reports that per-centage of the total contract revenue in its income statement.






3. The Eurodollar rate at which London banks lend dollars to other London banks; considered to be the best representative rate on a dollar borrowed by a private - high-quality borrower.






4. Momentum indicators based on price.






5. With respect to hypothesis testing - the rule according to which the null hypothesis will be rejected or not rejected; involves the compari-son of the test statistic to rejection point(s).






6. A method of presentation of accounting transactions in which effects on assets appear at the left and effects on liabilities and equity appear at the right of a central dividing line; also known as T-account format.






7. A contract in which one party has the right to claim a payment from another party in the event that a specific credit event occurs over the life of the contract.






8. 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






9. A solvency ratio calculated as EBIT divided by interest payments.






10. The differ-ence between net operating assets at the end and the beginning of the period.






11. The risk attributed to the operating cost structure - in particular the use of fixed costs in operations; the risk arising from the mix of fixed and variable costs; the risk that a company's operations may be severely affected by environ-mental - soc






12. The price paid to buy an asset.






13. A contract in which the under-lying asset is oil - a precious metal - or some other commodity.






14. The positive square root of semivari-ance (sometimes called semistandard deviation) .






15. A situation in a futures market where the current futures price is greater than the current spot price for the underlying asset.






16. The difference between the maximum and minimum values in a dataset.






17. The difference between current assets and current liabilities.






18. Each value on a binomial tree from which suc-cessive moves or outcomes branch.






19. In a nonconventional cash flow pattern - the initial outflow is not fol-lowed by inflows only - but the cash flows can flip from positive (inflows) to negative (outflows) again (or even change signs several times).






20. A combination of a long cap and a short floor - or a short cap and a long floor. A col-lar in general can have an underlying other than an interest rate.






21. The extent to which a company can effect - through the use of debt - a propor-tional change in the re turn on common equity that is greater than a given proportional change in operating income; also - short for the financial leverage ratio.






22. Company growth in output or sales that is achieved by making investments internally (i.e. - excludes growth achieved through mergers and acquisitions).






23. The value of the U.S. dollar in terms of other currencies in the foreign exchange market.






24. The value of exports of goods and ser-vices minus the value of imports of goods and services.






25. Valuation approach that values an asset as the present discounted value of the income expected from it.






26. A striNgent measure of liquidity th t ind'cates a company's ab'li ty to satisfY current liabilities with its most liquid assets - calcu-lated as (cash + short-tenn marketable invest-ments + receivables) divided by current liabilities.






27. Resources controlled by an enterprise as a result of past events and from which future eco-nomic benefits to the enterprise are expected to flow.






28. A variation of a floating-rate note that has some type of unusual characteristic such as a leverage factor or in which the rate moves opposite to interest rates.






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






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






31. A form of restructuring that involves the creation of a new legal entity and the sale of equity in it to outsiders.






32. A bond in which the amount received for delivering the bond is largest com-pared with the amount paid in the market for the bond.






33. The risk that a company will suffer an extended diminution in market value relative to other companies in the same industry due to a demonstrated lack of concern for environmental - social - and governance risk factors.






34. Sales price less disposition costs - amortized mortgage loan bal-ance - and capital gains taxes.






35. A finance perspective on capital markets that deals with the relationship of price to intrinsic value. The traditional efficient mar-kets formulation asserts that an asset's price is the best available estimate of its intrinsic value. The rational ef






36. Aka marking to market.






37. A cost that has already been incurred.






38. An acquisition in which the acquirer purchases the target company's assets and pay-ment is made directly to the target company.






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






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






41. The price for immediate purchase of the underlying asset.






42. An option on the yield spread on a bond.






43. A variation of the market approach; establishes a value estimate based on pricing multiples derived from the acquisition of control of entire public or private companies that were acquired.






44. A basis for reporting investment income in which the investing entity recognizes a share of income as earned rather than as divi-dends when received. These transactions are typi-cally reflected in Investments in Associates or Equity Method Investment






45. A liquidity ratio calculated as current assets divided by current liabilities.






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






47. Computer-generated sensitivity or sce-nario analysis that is based on probability models fo r the factors that drive outcomes.






48. Public-company com-parables for the company being valued.






49. A linear regression model with two or more independent variables.






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