Test your basic knowledge |

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 regression assumption violation that occurs when two or more independent vari-ables (or combinations of independent variables) are highly but not perfectly correlated with each other.






2. An international organi-zation that places greater obligations on its mem-ber countries to observe the GATT rules.






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






4. Time thought of as advancing in dis-tinct finite increments.






5. American Free Trade Agreement An agree-ment - which became effective on January 1 - 1994 - to eliminate all barriers to international trade between the United States - Canada - and Mexico after a 15-year phasing-in period.






6. Regulation that allowsprices to reflect only the actual average cost ofproduction and no monopoly profits.






7. Ratios that measure a company's ability to generate profitable sales from its resources (assets).






8. An approach to valuing natu-ral resource companies that estimates company value on the basis of the market value of the natu-ral resources the company controls.






9. Activities which are associated with the acquisition and disposal of property - plant - and equipment; intangible assets; other long-term assets; and both long-term and short-term investments in the equity and debt (bonds and loans) issued by other c






10. An option strategy involving the hold-ing of an asset and sale of a call on the asset.






11. In reference to corporate taxes - a system that imputes - or attributes - taxes at only one level of taxation. For countries using an imputation tax system - taxes on dividends are effectively levied only at the shareholder rate. Taxes are paid at th






12. Controlling additional property throughreinvestment - refinancing - and exchanging.






13. The rate at which periodic interest payments are calculated.






14. The relationship between the option price and the underlying price - which reflects the sensi-tivity of the price of the option to changes in the price of the underlying.






15. Factors related to the company's internal performance - such as factors relating to earnings growth - earnings variability - earnings momentum - and financial leverage.






16. A tabular display of data summarized into a relatively small number of intervals.






17. As used in this book - the use of a spreadsheet in executing a dividend discount model valuation - or other present value model valuation.






18. In using the method of com parables - the value of a price mul-tiple for the comparison asset; when we have com-parison assets (a group) - the mean or median value of the multiple for the group of assets.






19. Aka Harmonic mean.






20. 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.






21. The argument that it is necessary to protect a new industry to enable it to grow into a mature industry that can compete in world markets.






22. CMT swap A swap in which the floating rate is the rate on a security known as a constant maturity treasury or CMT security.






23. A merger involving the pur-chase of a target that is farther along the value or production chain; for example - to acquire a distributor.






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






25. A varia-tion ofVAR that reflects credit risk.






26. A loan in which the interest rate is reset at least once after the starting date.






27. A purchase involving a buyer having essentially no material synergies with the target (e.g. - the purchase of a private company by a company in an unrelated industry or by a private equity firm would typically be a financial transaction) .






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






29. A third party that is sough t out bX the tar-get c0mpany's board to Burchase a substantial minority stake in the target-enough to block a hostile takeover without selling the entire company.






30. 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.






31. With reference to a random vari-able - the property of having characteristics such as mean and variance that are not constant through time.






32. Real CDP divided by the population.






33. A floating-rate note or bond in which the coupon is adjusted at a multiple of a benchmark interest rate.






34. When parties agree to exchange only the net amount owed from one party to the other.






35. The sum of all values in a distribution or dataset - divided by the number of values summed; a synonym of arithmetic mean.






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






37. A probability based on logical analysis rather than on observation or personal judgment.






38. A feature of futures markets in which futures prices provide valuable information about the price of the underlying asset.






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






40. A forward contract calling for one party to make a fixed interest payment and the other to make an interest pay-ment at a rate to be determined at the contract expiration.






41. An option strategy that combines a bull spread and a bear spread having two differentexercise prices - which produces a risk-free payoffof the difference in the exercise prices.






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






43. Describes two time series that have a long-term financial or economic relationship such that they do not diverge from each other without bound in the long run.






44. An exchange rate pegged at a value decided by the government or central bank and that blocks the unregulated forces of demand and supply by direct intervention in the foreign exchange market.






45. Assets that are expected to bene-fit the company over an extended period of time (usually more than one year).






46. An option strategy involving the purchase of two calls and one put.






47. The condition in which supply equals demand.






48. An estimate of the country spread (country equity premium) for a develop-ing nation that is based on a comparison of bonds yields in country being analyzed and a developed country. The sovereign yield spread is the differ-ence between a government bo






49. A guarantee from the clear-inghouse that if one party makes money on a transaction - the clearinghouse ensures it will be paid.






50. The correlation of a time series with its own past values.