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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 accounting system of recording transactions in which every recorded transaction affects at least two accounts so as to keep the basic accounting equation (assets = liabilities + owners' equity) in balance.






2. Assets lacking physical substance - such as patents and trademarks.






3. The evaluation of credit risk; the evaluation of the creditworthiness of a borrower o r counterpar ty.






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






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






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






7. A swap in which the floating payments have a lower limit.






8. The rate of dividend (and earnings) growth that can be sustained over time for a given level of re turn on equity - keeping the capi tal structure constant and wi thout issuing addi tional common stock.






9. An asset that trades in a market in which buyers and sellers meet - decide on a price - and the seller then delivers the asset to the buyer and receives payment. The underlying is the asset or other derivative on which a particular derivative is base






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






11. The establishment of objectives for individuals - groups - or divisions of an organiza-tion that takes into account the allocation of an acceptable level of risk.






12. A depreciation method tHat allocates the cost of a long-lived asset based on-actual usage during the period .






13. Uncertainty with respect to the quantity of goods and services that a company is able to sell and the price it is able to achieve; the risk related to the uncertainty of revenues.






14. Netting the market values of all derivative contracts between two parties to deter-mine one overall value owed by one party to another in the event of bankruptcy.






15. The sample autocorrela-tions of the residuals.






16. A transaction in exchange-listed deriva-tive markets in which a party re-enters the market to close out a position.






17. The goods and services that we sell to peo-ple in other countries.






18. A company's operating profit with adjustments to normalize the effects of capital structure.






19. A company's chosen propor-tions of debt and equity.






20. A method for accounting forthe effect of convertible securities on earnings pershare (EPS) that specifies what EPS would havebeen if the convertible securities had been con-verted at the beginning of the period - taking account of the effects of conv






21. Investigation and analysis in support of a recommendation; the failure to exercise due diligence may sometimes result in liability accord-ing to various securities laws.






22. Valuation indi-cators that compare a stock's performance during a period either to its own past performance or to the performance of some group of stocks.






23. The ratio of a stock's market price to some m asure of va ue per share.






24. A finan-cial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its oper-ations; equal to days of inventory on hand + days of sales outstanding - number of days of






25. An intangible asset that represents the excess of the purchase price of an acquired com-pany over the value of the net assets acquired.






26. Costs associated with the conflict of interest present when a company is managed by non-owners. Agency costs result from the inher-ent conflicts of interest between managers and equity owners.






27. Excess inventory that is held in anticipation of increased demand - often because of seasonal patterns of demand.






28. A method of account-ing in which combined companies were portrayed as if they had always operated as a single eco-nomic entity. Called pooling of interests under






29. An activity ratio equal to the number of days in the period divided by inventory turnover over the period.






30. The earnings per share that a busi-ness could achieve currently under mid-cyclical conditions.






31. Debt issued with warrants that give the bondholder the right to purchase equity at prespecified terms.






32. The dollar amount of cash divi-dends paid during a period per share of common stock.






33. The use of accounts receivable as collateral for a loan.






34. The number of indepen-dent observations used.






35. 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.






36. Valuation approach that values an asset based on pricing multiples from sales of assets viewed as similar to the subject asset.






37. A valuation ratio calculated as price per share divided by cash flow per share.






38. Uncorrelated; at a right angle.






39. A variation of a floating-rate note that has some type of unusual characteristic such as a leverage factor or in which the rate moves opposite to interest rates.






40. Debt with the added feature that the bondholder has the option to exchange the debt for equity at prespecified terms.






41. Observations that are depen-dent on each other.






42. A statistical test for differ-ences based on paired observations drawn from samples that are dependent on each other.






43. An offset to accounts receivable for the amount of accounts receivable that are estimated to be uncollectible.






44. A number between - 1 and + 1 that measures the co-movement (linear association) between two random variables.






45. A procedure by which a population is divided into subpopulations (strata) based on one or more classification criteria. Sim-ple random samples are then drawn from each stratum in sizes proportional to the relative size of each stratum in the populati






46. A bias caused by using information that was not available on the test date.






47. Amount that must be set aside each period to have $1 at some future point in time.






48. An act passed by the U.S. Congress in 1934 that created the Securi-ties and Exchange Commission (SEC) - gave the SEC authority over all aspects of the securities industry - and empowered the SEC to require peri-odic reporting by companies with public






49. An estimate of the average number of days it takes deposited checks to clear; average daily float divided by average daily deposit.






50. A legal restriction that dividends cannot exceed retained earnings.