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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 set of assets available for investment.






2. A condition in the futures markets in which a transaction cannot take place because the price would be beyond the limits.






3. Covering or containing all possible outcomes.






4. A transformation that involves sub-tracting the mean and dividing the result by the standard deviation.






5. Revenue that has been earned but not yet billed to customers as of the end of an accounting period.






6. 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.






7. A profitability ratio calcu-lated as net income divided by average sharehold-ers' equity.






8. Heteroskedasticity in the error variance that is correlated with the values of the independent variable(s) in the regression.






9. A strategy in which a position is hedged by making frequent adjustments to the quantity of the instrument used for hedging in relation to the instrument being hedged.






10. The probability-weighted average of the possible outcomes ofa random variable.






11. The system of principles - policies - procedures - and clearly defined responsi-bilities and accountabilities used by stakeholders to overcome the conflicts of interest inherent in the corporate form.






12. The price at which an asset or liability would change hands between a willing buyer and a willing seller whe n the former is not under any compulsion to buy and the latter is not under any compulsion to sell; the price that would be received to sell






13. Assets that are expected to provide economic benefits over a future period of time - typically greater than one year.






14. The unsold units of product on hand.






15. The property of having a constantvariance; refers to an error term that is constantacross observations.






16. A set of observations on a variable's out-comes in different time periods.






17. An index fund position cre-ated by combining risk-free bonds and futures on the desired index.






18. A stage of growth in which a company typically enjoys rapidly expanding markets - high profit margins - and an abnormally high growth rate in earnings per share.






19. A theory of economic growth that proposes that real CDP per person grows because technological change induces a level of saving and investment that makes capital per hour oflabor grow.






20. The minimum real wage rate needed to maintain life.






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






22. The amount to which a payment or series of payments will grow by a stated future date.






23. The cash flow available to a company's common shareholders after all operat-ing expenses - interest - and principal payments have been made - and necessary investments in working and fixed capital have been made.






24. 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.






25. The day that options are granted to employees; usually the date that compensation expense is measured if both the number of shares and option price are known.






26. The quoted interest rate per period; the stated annual interest rate divided by the number of compounding periods per year.






27. A method of accounting in which combined companies were portrayed as if they had always operated as a single economic entity. Called pooling of interests under U.S. GAAP and uniting of interests under IFRS. (No longer allowed under U.S. GAAP or IFRS.






28. A tax that is imposed by the importing coun-try when an imported good crosses its interna-tional boundary.






29. Cash-settled for-ward contracts - used predominately with respect to foreign exchange forwards.






30. The portion of an entity's income that is subject to income taxes under the tax laws of its jurisdiction.






31. A procedure for determining the interest on a bond or loan in which the interest is added onto the face value of a contract.






32. Numbers produced by random number generators.






33. Research and development costs relating to projects that are not yet completed - such as have been incurred by a company that is being acquired.






34. 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.






35. The perceived ability of the bor-rower to pay what is owed on the borrowing in a timely manner; it represents the ability of a com-pany to withstand adverse impacts on its cash flows.






36. With reference to a sample - the mean of the absolute values of deviations from the sample mean.






37. 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.






38. An option that gives the holder the right to buy an underlying asset from another party at a fixed price over a specific period of time.






39. A profitability ratio calculated as (net income - preferred divi-dends) divided by average common equity; equal to the return on equity ratio when no preferred equity is outstanding.






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






41. An offset to property - plant - and equipment (PPE) reflecting the amount of the cost of PPE that has been allocated to current and previous accounting periods.






42. Options that are far in-the-money.






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






44. The amount by which the takeover price for each share of stock must exceed the current stock price in order to entice shareholders to relinquish control of the com-pany to an acquirer.






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






46. In accounting - a liability of uncertain tim-ing or amount.






47. The price multiple for a stock assumed to hold at a stated future time.






48. With reference to statistical inference - astatement about one or more populations.






49. The amount of dispersion rela-tive to a reference value or benchmark.






50. The expected excess return on the market over the risk-free rate.