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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 business owned and operated by a single person.






2. The calculation of returns in a logical and consistent manner.






3. With reference to the error term of a regression - having a variance that differs across observations.






4. An algorithm that pro-duces uniformly distributed random numbers between 0 and 1.






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






6. A perpetual annuity - or a set of never-ending level sequential cash flows - with the first cash flow occurring one period from now.






7. Method of managing inventory that minimizes in-process inventory stocks. kth order autocorrelation The correlation between observations in a time series separated by k periods.






8. An estimate of a parameter that involves combining (pooling) observations from two or more samples.






9. A solvency ratio calculated as total debt divided by total shareholders' equity.






10. 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.






11. A method of account-ing for joint ventures where the venturer's share of the assets - liabilities - income and expenses of the joint venture are combined on a line-by-line basis with similar items on the venturer's financial statements.






12. Internal or external limita-tions on investments.






13. The currency of the primary economic environment in which an entity operates.






14. Events such that only one can occur at a time.






15. The sum of the sample observations - divided by the sampfe size.






16. The market for short-term debt instruments (one-year maturity or less).






17. The particular value calculated from sam-ple observations using an estimator.






18. The relationship of the quantity of an asset being hedged to the quantity of the deriva-tive used for hedging.






19. Net operating income less debt service and less taxes payable on income from operations.






20. A series of call options on an interest rate - with each option expiring at the date on which the floating loan rate will be reset - and with each option having the same exercise rate. A cap in general can have an underlying other than an interest ra






21. A value against which a computed test statistic is compared to decide whether to reject or not reject the null hypothesis.






22. A pre-offer takeover defense mecha-nism that gives target company bondholders the right to sell their bonds back to the target at a pre-specified redemption price - typically at or above par value; this defense increases the need for cash and raises






23. The margin requirement on any day other than the first day of a transaction.






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






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






26. 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.






27. A merger; the term may be applied to any transaction - but is often used in reference to hos-tile transactions.






28. The difference between reported net income on an accrual basis and the cash flows from operating and investing activities.






29. Cash and investments (specifi-cally cash - cash equivalents - and short-term investments) .






30. A result indicating that the null hypothesis can be rejected; with reference to an estimated regression coefficient - frequently understood to mean a result indicating that the corresponding population regression coefficient is different from O.






31. An acquisition in which the acquirer purchases the target company's assets and pay-ment is made directly to the target company.






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






33. Sales price less disposition costs - amortized mortgage loan bal-ance - and capital gains taxes.






34. A transaction whereby the target company management team converts the target to a privately held company by using heavy borrowing to finance the purchase of the target company's outstanding shares.






35. Generally - a synonym for revenue; 'sales' is generally understood to refer to the sale of goods - whereas 'revenue' is understood to include the sale of goods or services.






36. A rule explaining the expected value of a random vari-able in terms of expected values of the random variable conditional on mutually exclusive and exhaustive scenarios.






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






38. The divisor in the expression for the value of a perpetuity.






39. The risk that govern-mental laws and regulations directly or indirectly affecting a company's operations will change with potentially severe adverse effects on the com-pany's continued profitabiliny and even its long-term sustainability.






40. The difference between inventory reported as FIFO and 'nventory reported as LIFO (FIFO inventory value less LIFO inventory val e).






41. Common-size analysis using only one reporting period or one base financial state-ment; fo r example - an income statement in which all items are stated as percentages of sales.






42. A level of inventory beyond anticipated needs that provides a cushion in the event that it takes longer to replenish inventory than expected or in the case of greater than expected demand.






43. With reference to equity investors - investors who seek to invest in high-earnings-growth companies.






44. Valuation indicators that relate either price or a fundamental (such as earnings) to the time series of their own past val-ues (or in some cases to their expected value).






45. A company that has similar business risk; usually in the same industry and preferably with a single line of business.






46. The estimated gross amount of money that could be realized from the liquidation sale of an asset or assets - given a rea-sonable amount of time to find a purchaser or purchasers.






47. A quoted interest rate that does not account for compounding within the year.






48. A solvency ratio calculated as total debt divided by total assets.






49. The feature of a futures contract giv-ing the short the right to make decisions about what - when - and where to deliver.






50. Describes a distribution that is less peaked than the normal distribution.