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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. When assets trans-lated at the current exchange rate are greater in amount than liabilities translated at the current exchange rate. Assets exposed to translation gains or losses exceed the exposed liabilities.






2. Corporate earnings are taxed twice when paid out as dividends. First - corporate earn-ings are taxed regardless of whether they will be distributed as dividends or retained at the G-13 corporate level - and second - dividends are taxed again at the i






3. The risk associated with changes in the relative attractiveness of products and services offered for sale - arising out of the competitive effects of changes in exchange rates.






4. A trader holding a position open some-what longer than a scalper but closing all posi-tions at the end of the day.






5. With reference to a transaction or a security - one that would increase earnings per share (EPS) or result in EPS higher than the com-pany's basic EPS-antidilutive securities are not included in the calculation of diluted EPS.






6. Resources controlled by an enterprise as a result of past events and from which future eco-nomic benefits to the enterprise are expected to flow.






7. 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






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






9. Under U.S. GAAP -a special purpose entity structured to avoid consol-idation that must meet qualification criteria.






10. 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.






11. The actual amount paid for income taxes in the period; not a provision - but the actual cash outflow.






12. For accounting purposes - the exchange rates that existed when the assets and liabilities were initially recorded.






13. Mean active return divided by active risk; or alpha divided by the standarddeviation of diversifiable risk.






14. Aka also enterprise risk management.






15. A commercial imple-mentation of the residual income concept; the computation of EVA® is the net operating profit after taxes minus the cost of capital - where these inputs are adjusted for a number of items.






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






17. Said of a sale in which proceeds are to be paid in installments over an extended period of time.






18. The rule that the joint probability of events A and B equals the probability of A given B times the probability of B.






19. The day that the corporation issues a statement d eclaring a specific dividend.






20. A merger or acquisition in which target shareholders are to receive shares of the acquirer's common stock as compensation.






21. 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






22. Assets that can be most readily con-verted to cash (e.g. - cash - short-term marketable investments - receivables) .






23. The value of an asset given a hypothetically complete understand-ing of the asset's investment characteristics; the value obtained if an option is exercised based on current conditions.






24. A financial instrument that gives one party the right - but not the obligation - to buy or sell an underlying asset from or to another party at a fixed price over a specific period of time. Also referred to as contingent claims.






25. Bias introduced by systemati-cally exclua ing some members of the population according to a particular attribute-for example - the bias introduced when data availability leads to certain observations being excluded from the analysis.






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






27. The return on a portfolio minus the return on the portfolio's benchmark.






28. 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.






29. Selling a product in slightly altered forms to different groups of consumers.






30. The financial state-ment that presents an entity's current financial position by disclosing resources the entity con-trols (its assets) and the claims on those resources (its liabilities and equity claims) - as of a particular point in time (the date






31. A valuation multiple that relates the total market value of all sources of a company's capital (net of cash) to a measure of fundamental value for the entire company (such as a pre-interest earnings measure).






32. An act passed by the U.S. Con-gress in 1933 that specifies the financial and other significant information that investors must receive when securities are sold - prohibits misrepresenta-tions - and requires initial registration of all public issuance






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






34. Analysis that shows the changes in key financial quantities that result from given (economic) events - such as the loss of customers - the loss of a supply source - or a catastrophic event; a risk management technique involving examina-tion of the pe






35. 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






36. With reference to equity investors - investors whose investment disciplines cannot be clearly categorized as value or growth.






37. The distribution of all distinct possible values that a statistic can assume when computed from samples of the same size ran-domly drawn from the same population.






38. 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.






39. The graph of the capital asset pricing model.






40. A type of top-down investing approach that involves emphasizing different eco-nomic sectors based on considerations such as macroeconomic forecasts.






41. A transaction in which a position in the underlying is protected by buying a put and selling a call with the premium from the sale of the call offsetting the premium from the purchase of the put. It can also be used to protect a floating-rate borrowe






42. An interest rate swap in which one party pays a fixed rate and the other pays a float-ing rate - with both sets of payments in the same currency.






43. Historical beta adjusted to reflect the tendency of beta to be mean reverting.






44. Linear regression involv-ing two or more independent variables.






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






46. The potential for asymmetric information to bring about a general decline in product quality in an industry.






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






48. Orders to buy or sell that are too large for the liquidity ordinarily available in dealer networks or stock exchanges.






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






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