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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 rate of return that must be met fora project to be accepted.






2. An amount equal to net taxes minus government expenditure on goods and services.






3. Observations on characteristic(s) of the same observational unit through time.






4. In reference to short-term cash management - it is an investment strategy charac-terized by simple decision rules for making daily investments.






5. A country's record of international trading - borrowing - and lending.






6. The first date that a share trades without (i.e. - 'ex') the dividend.






7. Trading ex-dividend refers to shares that no longer carry the right to the next dividend payment.






8. Investments in which the investor has no signifi-cant influence or control over the operations of the investee.






9. An illiquidity discount that occurs when an investor sells a large amount of stock rela-tive to its trading volume (assuming it is not large enough to constitute a controlling ownership).






10. Not due to be consumed - converted into cash - or settled within one year after the bal-ance sheet date.






11. A purchase involving a buyer that would benefit from certain synergies associ-ated with owning the target firm.






12. CMT A hypothetical U.S. Treasury note with a constant maturity. A CMT exists for various years in the range of 2 to






13. The number of shares that target stockholders are to receive in exchange for each of their shares in the target company.






14. A form of active strategy which entails scheduling maturities on a systematic basis within the investment portfolio such that invest-ments are spread out equally over the term of the ladder.






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






16. An approach for estimating a country's equity risk premium. The market rate of return is estimated as the sum of the dividend yield and the growth rate in dividends for a market index. Subtracting the risk-free rate of return from the estimated marke






17. The competitive strategy of offeringunique products or services along some dimen-sions that are widely valued by buyers so that thefirm can command premium prices.






18. An option strategy involving the purchase of a put and sale of a call in which the holder of an asset gains protection below a certain level - the exercise price of the put - and pays for it by giving up gains above a certain level - the exercise pri






19. Corporate earnings are taxed twice when paid out as dividends. First - corporate earn-ings are taxed regardless of whether they will be distributed as dividends or retained at the G-13 corporate level - and second - dividends are taxed again at the i






20. An option strategy in which a long position in a certain number of options is offset by a short position in a certain number of other options on the same underlying - resulting in a risk-free position.






21. A regression estimation technique that addresses heteroskedasticity of the error term.






22. A poison pill provision that allows for the redemption or cancellation of a poi-son pill provision only by a vote of coNtinuing directors (generally directors who were on the tar-get company's board p rior to the takeover attempt) .






23. Hirschman Index A measure of rna ket concentration that is calculated by summing the squared mar et shares for competing companies in an industry; high HHI readings or mergers that would result in large HHI increases are more likely to result in regu






24. The risk of loss from failures in a company's systems and proce-dures (for example - due to computer failures or human failures) or events completely outside of the control of organizations (which would include 'acts of God' and terrorist actions) .






25. A test for conditional het-eroskedasticity in the error term of a regression.






26. With reference to assets - the amount of cash or cash equivalents that could currently be obtained by sell ing the asset i an orderly disposal; with reference to lia-bilities - the undiscounted amount of cash or cash equivalents expected to be paid t






27. A valuation multiple that relates the total market value of all sources of a company's capital (net of cash) to a measure of fundamental value for the entire company (such as a pre-interest earnings measure).






28. A fUl !lction giving the probability of joint occurrences of values of stated random variables.






29. PIE The price-to-earnings ratio that is fair - warranted - or justified on the basis of forecasted fundamentals.






30. A reduction in proportional ownership inter-est as a result of the issuance of new shares.






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






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






33. The day that employees actually exer-cise the options and convert them to stock.






34. Attempts by management to encourage analysts to forecast a slightly lower number for expected earnings than the analysts would otherwise forecast.






35. A form of restructuring in which sharehold-ers of the parent company are given shares in a /Jewl y c eated entity in e~change for their shares of the pare ~ company.






36. Offering two or more products for sale as a set.






37. The government's holding of foreign cun; - e.!}cy.






38. An algorithm that pro-duces uniformly distributed random numbers between 0 and 1.






39. The date of the final paymen on a swap' also - the swap's e piration date.






40. The graph of the capital asset pricing model.






41. A balance sheet organized so as to group together the various assets and liabilities into subcategories (e.g. - current and noncurrent) .






42. Activities that are part of the day-to-day business functioning of an entity - such as selling inven tory and providing services.






43. The granting of stock to employees as a form of compensation.






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






45. An approach to investing thatfocuses on the individual characteristics of securi-ties rather than on macroeconomic or overall market forecasts.






46. Is Derivatives in which the payoffs occur if a specific event occurs; generally referred to as options.






47. The number of units produced and sold at which the company's net income is zero (revenues = total costs).






48. A mean computed after excluding a stated small percentage of the lowest and highest observations.






49. A measure of the sensitivity of a bond's yield to a general measure of bond yields in the market that is used to refine the hedge ratio.






50. A yield on a basis comparable to the quoted yield on an interest-bearing money market instrument that pays interest on a 360-<iay basis; the annualized holding period yield - assuming a 360-<iay year.







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