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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 measure of th e yield on the undel~ ing bond of a futures contract implied by pricing it as though the underlying will be delivered at the futures expiration.






2. Aka Harmonic mean.






3. FIrm The cash flow available to the company's suppliers of capital after all operat-ing expenses (including taxes) have been paid and necessary investments in working and fixed capital have been made.






4. An amount equal to net taxes minus government expenditure on goods and services.






5. Income rate that reflects the relationship between equity income and equity capital.






6. The posi tive square root of tar-get semivar·ance.






7. Method of valu-ing property based on recen t sales prices of simi-lar properties.






8. 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 .






9. A procedure of selecting every kth member until reaching a sample of the desired size. The sample that results from this procedure should be approximately random.






10. The property of having a non-constant variance; refers to an error term with the property that its variance differs across observations.






11. 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).






12. The principle that dol-lar amounts indexed at the same point in time are additive.






13. The mix of a company's variable costsand fixed costs.






14. A floating-rate note or bond in which the coupon is adjusted to move opposite to a benchmark interest rate.






15. 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






16. A tabular display of data summarized into a relatively small number of intervals.






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






18. All changes in equity other than contributions by - and distributions to - own-ers; income under clean surplus accounting; includes all changes in equity during a period except those resulting from investments by own-ers and distributions to owners;






19. The first in - first out - method of accounting for inventory - which matches sales against the costs of items of inventory in the order in which they were placed in inventory.






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






21. The average squared deviation below a target value.






22. The U.S. interest rate minus the foreign interest rate.






23. The most frequently occurring value in a set of observations.






24. Quantiles that divide a distribution into five equal parts.






25. The variable whose variationabout its mean is to be explained by the regres-sion; the left-hand-side variable in a regressionequation.






26. A portfolio with sensitivity of 1to the factor in question and a sensitivity of 0 to allother factors.






27. The probability that an asset's value moves up.






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






29. Valuation approach that values an asset as the present discounted value of the income expected from it.






30. The required rate of return on com-mon stock.






31. The owners of a joint venture. Each is active in the management and shares control of the joint venture.






32. The cash flow that is real-ized because of a decision; the changes or incre-ments to cash flows resulting from a decision or action.






33. Carlo simulation method An approach to estimating a probability distribution of outcomes to examine what might happen if particular risks are faced. This method is widely used in the sci-ences as well as in business to study a variety of problems.






34. An approach to using price multiples that relates a price multiple to forecasts of fundamentals through a discounted cash flow model.






35. The amount available for fixed costs and profit after paying variable costs; rev-enue minus variable costs.






36. ROA) A prof-itability ratio calculated as operating income divided by average total assets.






37. A type of non-audited financial statements; typically provide an opinion letter with representations and assurances by the reviewing accountant that are less than those in audited financial statements.






38. The probability of an event not conditioned on another event.






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






40. The probability that an asset's value moves down in a model of asset price dynamics.






41. Long-term assets with physical sub-stance that are used in company operations - such as land (property) - plant - and equipment.






42. A model for pncmg futurescontracts in which the futures price is determinedby adding the cost of carry to the spot price.






43. An extra return that compen-sates investors for the possibility that the borrower will fail to make a promised payment at the con-tracted time and in the contracted amount.






44. A reduction or discount to value that reflects the lack of depth of trading or liquid-ity in that asset's market.






45. An option in which the holder has the right to make an unknown interest payment and receive a known interest payment.






46. The strategy of using futures contracts to enter the market without an immediate outlay of cash.






47. Futures contracts in which the underlying is a traditional agricultural - metal - or petroleum product.






48. The expected return on equi-ties minus the risk-free rate; the premium that investors demand for investing in equities.






49. Provision for a return of invest-ment - net of value appreciation.






50. The amount that each unit sold contributes to covering fixed costs- that is - the difference between the price per unit and the variable cost per unit.







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