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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 graphical representa-tion of the expected return and risk of all portfo-lios that can be formed using two assets.






2. Options that are far out-of-the-money.






3. The risk that failures by company man-agers to effectively manage a company's environ-mental - social - and governance risk exposures will lead to lawsuits and other judicial remedies - resulting in potentially catastrophic losses for the company; th






4. A balance sheet asset that arises when an excess amount is paid for income taxes relative to accounting profit. The taxable income is higher than accounting profit and income tax payable exceeds tax expense. The company expects to recove r the differ






5. An account that offsets another account.






6. A quantity computed from or used to describe a sample.






7. Taken as a deduction in arriving at net income.






8. A qualitative-dependent-variable multi-ple regression model based on the logistic proba-bility distribution.






9. R The correlation between the actual and forecasted values of the dependent variable in a regression.






10. An increment or premium to value associated with a controlling ownership interest in a company.






11. A subset of a larger popula-tion created in such a way that each element of the population has an equal probability of being selected to the subset.






12. The relationship between earnings - dividends - and book value in which end-ing book value is equal to the beginning book value plus earnings less dividends - apart from ownership transactions.






13. An indicator of profitability - calculated as net income divided by revenue; indicates how much of each dollar of revenues is left after all costs and expenses.






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






15. An inventory accounting method in which the sales value of an item is reduced by the gross margin to calculate the item's cost.






16. The risk associated with the conversion of foreign financial statements into domestic currency.






17. A taxable loss in the current period that may be used to reduce future taxable income.






18. A trend in which the dependent vari-able changes at a constant rate with time.






19. The company in a merger or acquisition that is acquiring the target.






20. A legal corporate entity whose shareholders are its members. The members of the exchange have the privilege of executing transactions directly on the exchange.






21. A means of settling payments in which the amount owed by the first party to the second is netted with the amount owed by the sec-ond party to the first; only the net difference is paid.






22. The extent to which a company's operations are predictable with substantial confidence.






23. The combination of puts - the underly-ing - and risk-free bonds that replicates a call option.






24. The slope of the capital market line - indicating the market risk premium for each unit of market risk.






25. A company without positive expected net present value projects.






26. A measure of sensitivity; the incremental change in one variable with respect to an incre-mental change in another variable.






27. A result in probability theory stating that inconsistent probabilities create profit opportunities.






28. Also called present value of a basis point or price value of a basis point (PVBP) - the change in the bond price for a I basis point change in yield.






29. 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) .






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






31. The differential of infor-mation between corporate insiders and outsiders regarding the company's performance and prospects. Managers typically have more informa-tion about the company's performance and prospects than owners and creditors.






32. An opportunity to conduct an arbitrage; an opportunity to earn an expected positive net profit without risk and with no net investment of money.






33. Costs of research and development in progress atan acquired company; often - part of the purchaseprice of an acquired company is allocated to suchcosts.






34. The pro-portion of the ownership of a subsidiary not held by the parent (controlling) company.






35. A type of subsidiary engaged in derivatives trans-actions that is separated from the parent company in order to have a higher credit rating than the parent company.






36. Division ofnet operating income by an overall capitalization rate to arrive at market value.






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






38. PIE PI Es based on normalized EPS data.






39. The ratio of the market value of debt and equity to the replacement cost of total assets.

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40. A variation of VAR that reflects the risk of a company's cash flow instead of its market value.






41. An event or piece of information that causes the marketplace to re-evaluate the prospects of a company.






42. A model of intrinsic value that views the value of an asset as the present value of the asset's expected future cash flows.






43. An option in which the underlying is a stock index.






44. The uncertainty associated with tax laws.






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






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






47. The process of obtaining a sample.






48. A merger in which the company being purchased becomes a subsidiary of the purchaser.






49. With reference to cash flow statements - a format for the presenta-tion of the statement which - in the operating cash flow section - begins with net income then shows additions and subtractions to arrive at operatingcash flow.






50. A form of restructuring in which sharehold-ers of a parent company receive a proportional number of shares in a new - separate entity; share-holders end up owning stock in two different companies where there used to be one.