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 solvency ratio calculated as total debt divided by total debt plus total share-holders ' equi ty.






2. A tactic used by acquirers to circumvent target management's objections to a proposed merger by submitting the proposal directly to the target company's board of directors.






3. Above average or abnormally high growth rate in earnings per share.






4. The seller of a derivative contract. Also refers to the position of being short a derivative.






5. The value of a company if the com-pany were dissolved and its assets sold individually.






6. Investments in which investors exert significant influence - but not con-trol - over the investee. Typically - the investor has 20 to 50 % ownership in the investee.






7. Agreements between the company as borrower and its creditors.






8. A forecasting approach that involves aggregating the individual company forecasts of analysts into industry fore-casts - and finally into macroeconomic forecasts.






9. Forecasted dividends per share over the next year divided by current stock price.






10. A mean computed after assigning a stated percent of the lowest values equal to one specified low value - and a stated percent of the highest values equal to one specified high value.






11. European option An option contract that can only be exercised on its expiration date.






12. The number of observations in a given interval (for grouped data) .






13. A forward contract in which the underlying is a bond.






14. Observations through time on a single characteristic of multiple observational units.






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






16. An index fund position cre-ated by combining risk-free bonds and futures on the desired index.






17. A quantitative measure that specifies where data are centered.






18. An approach to valuation that involves using a price multiple to evaluate whether an asset is relatively fairly valued - rela-tively undervalued - or relatively overvalued when compared to a benchmark value of the multiple.






19. The rate of return from a cash-and-carry transaction implied by the futures price relative to the spot price.






20. Sales on a bill-and-hold basis involve selling products but not delivering those products until a later date.






21. The business of acting as agents for buy-ers or sellers - usually in return for commissions.






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






23. The management of a company's short-term assets (such as inventory) and short-term liabilities (such as money owed to suppliers) .






24. A ratio in property valua-tion; net operating income divided by sale price. Also known as the going-in rate.






25. The study of how data can besummarized effectively.






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






27. The cost of borrowing expressed as a yearly rate.






28. 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.






29. 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.






30. Hirschman Index A measure of rna ket concentration that is calculated by summing the squared mar et shares for competing companies in an industry; high HHI readings or mergers that would result in large HHI increases are more likely to result in regu






31. 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






32. Segment revenue divided by seg-ment assets .






33. Options that - if exercised - would require the payment of more money than the value received and therefore would not be cur-rently exercised.






34. The analysis of portfolio performance in terms of the contribu-tions from various sources of risk.






35. An entity associated with a futures market that act~ as middleman between the con-tracting parties and guarantees to each party the performance of the other.






36. Fixed-income secuntles in which the holder of the security has the right to withhold payment of the full amount due at matu-ri ty if a credi t even t occurs.






37. An arrangement whereby a customer authorizes a debit to a demand account; typically used by companies to collect routine pay-ments for services.






38. Computer-generated sensitivity or sce-nario analysis that is based on probability models fo r the factors that drive outcomes.






39. Aka Harmonic mean.






40. A method of accounting for abusiness combination where the acquiring com-pany allocates the purchase price to each assetacquired and liability assumed at fair value. If thepurchase price exceeds the allocation - the excessis recorded as goodwill.






41. A combination of a European call and a risk-free bond that matures on the option expiration day and has a face value equal to the exer-cise price of the call.






42. Earnings exclud-ing nonrecurring components.






43. The ratio of the percentage change in net income to the percent-age change in operating income; the sensitivity ofthe cash flows available to owners when operating income changes.






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






45. A loan that is secured with com-panyassets.






46. Revenue after adjustments (e.g. - for estimated returns or for amounts unlikely to be collected).






47. A procedure used in certain deriva-tive transactions that specifies that the long and short parties engage in the equivalent cash value of a delivery transaction.






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






49. The error of not rejecting a false null hypothesis.






50. A potential business combina-tion that is endorsed by the managers of both companies.