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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. An annuity having a first cash flow that is paid immediately.






2. The amount at which an asset or liability is valued for tax purposes.






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






4. A stage of growth in which the com-pany reaches an equilibrium in which investment opportunities on average just earn their opportu-nity cost of capital.






5. Liabilities related to expenses that have been incurred butnot yet paid as of the end of an accountingperiod-an example of an accrued expense is rent that has been incurred but not yet paid -resulting in a liability 'rent payable.'






6. A financial instrument that gives one party the right - but not the obligation - to buy or sell an underlying asset from or to another party at a fixed price over a specific period of time. Also referred to as contingent claims.






7. A limit move in the futures market in which the price at which a transaction would be made is at or above the upper limit.






8. The expected value (the probability-weighted average) of squared deviations from a random variable's expected value.






9. An activity ratio equal to rev-enue divided by average receivables.






10. A merger or acquisition that is to be paid for with cash; the cash for the merger might come from the acquiring company's existing assets or from a debt issue.






11. A method for updating probabilities based on new information.


12. A country that during its entire his-tory has borrowed more in the rest of the world than other countries have lent in it.






13. A quantity whose future outcomes are uncertain.






14. A graph of a frequency distri-bution obtained by drawing straight lines join-ing successive points representing the class frequencies.






15. 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).






16. Any action other than a tariff that restricts international trade.






17. A long-term pattern of movement in a partic-ular direction.






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






19. 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.






20. Lack of bias. A desirable property of estimators - an unbiased estimator is one whose expected value (the mean of its sampling distri-bution) equals the parameter it is intended to estimate.






21. The standard deviation of active returns.






22. An intangible that can beacquired singly and is typically linked to specificrights or privileges having finite benefit periods(e.g. - a patent or trademark).






23. A range that has a given proba-bility that it will contain the population parameter it is intended to estimate.






24. An approach to decomposing return on investment - e.g. - return on equity - as the product of other financial ratios.






25. A method of valuing prop-erty based on site value plus current construction costs less accrued depreciation.






26. Plan in which the company promises to pay a certain annual amount (defined benefit) to the employee after retirement. The company bears the investment risk of the plan assets .






27. An estimation formula; the formula used to compute the sample mean and other sample statistics are examples of estimators.






28. A reduction or discount to value for shares that are not publicly traded.






29. The combining of the results of oper-ations of subsidiaries with the parent compaIL y to present financial statements as if they were a sin-gle economic unit. The asset - iabilities - revenues and expenses of the subsidiaries are combined with those






30. The mix of debt and equity that a company uses to finance its business; a company's specific mixture of long-term financing.






31. 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.






32. Members ips in a derivatives exchange.






33. Segment profit (loss) divided by seg-ment assets.






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






35. A reduction in the number of shares outstanding with a corresponding increase in share price - but no change to the company's underlying fundamentals.






36. The currency in which finan-cial statement amounts are presented.






37. A model of stock val-uation that views a stock's intrinsic value as the present value of expected future free cash flows to equity.






38. A statistical model used to clas-sifY borrowers according to creditworthiness.






39. A record of foreign investment in a country minus its investment abroad.






40. A type of swap transaction used as a credit derivative in which one party makes peri-odic payments to the other and receives the prom-ise of a payoff if a third party defaults.






41. The costs of holding an asset - generally a function of the physical char-acteristics of the underlying asset.






42. In probability - with reference to an event 5 - the event that 5 does not occur; in eco-nomics - a good that is used in conjunction with another good.






43. The allocation of funds to rela-tively long-range projects or investments.






44. A pre-offer takeover defense mech-anism involving the corporate charter (e.g. - stag-gered boards of directors and supermajority provisions) .






45. The amount of variability pres-ent without comparison to any reference point or benchmark.






46. 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.






47. A widely used approach to estimate an overall capitalization rate. It is based on the premise that debt and equity financ-ing is typically involved in a real estate transaction.






48. In reference to short-term cash man-agement - an investment strategy characterized by monitoring and attempting to capitalize on mar-ket conditions to optimize the risk and return relationship of short-term investments.






49. Describes a distribution with kurtosis identical to that of the normal distribution.






50. Under U.S. GAAP - a measure used in estimating a defined-benefit pen-sion plan's liabilities - defined as 'the actuarial present value as of a date of all benefits attributed by the pension benefit formula to employee ser-vice rendered prior to that