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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 trend in which the dependent vari-able changes at a constant rate with time.






2. A country that during its entire his-tory has invested more in the rest of the world than other countries have invested in it.






3. An inventory accounting method that averages the total cost of available inventory items over the total units avail-able for sale.






4. The earnings growth rate in a company's mature phase; an earnings growth rate that can be sustained long term.






5. A model of stock val-uation that views a stock's intrinsic value as the present value of expected future free cash flows to equity.






6. Each value on a binomial tree from which suc-cessive moves or outcomes branch.






7. A theory pertaining to a company's optimal capital struc-ture; the optimal level of debt is found at the point where additional debt would cause the costs of financial distress to increase by a greater amount than the benefit of the additional tax sh






8. The amount of time between check issuance and a check's clearing back against the company's account.






9. A third party that is sought out by the target company's board to purchase the target in lieu of a hostile bidde .






10. A breakdown of accounts into cate-gories of days outstanding.






11. A measure of VAR equivalentto the analytical method bu t that refers to the use of delta to estimate the option's price sensitivity.






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






13. The value to a specific buyer - tak-ing account of potential synergies based on the investor's requirements and expectations.






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






15. The official price - designated by the clearinghouse - from which daily gains and losses will be determined and marked to market.






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






17. A business's value under a going-concern assumption.






18. A merger in which the company being purchased becomes a subsidiary of the purchaser.






19. A form of restructuring that involves the creation of a new legal entity and the sale of equity in it to outsiders.






20. The assumption that the business will maintain its business activities into the foreseeable future.






21. The compound rate of growth of one unit of currency invested in a port-folio during a stated measurement period; a mea-sure of investment performance that is not sensitive to the timing and amount of withdrawals or additions to the portfolio.






22. A form of restructuring in which sharehold-ers of the parent company are given shares in a /Jewl y c eated entity in e~change for their shares of the pare ~ company.






23. A variation of the market approach; establishes a value estimate based on pricing multiples derived from the acquisition of control of entire public or private companies that were acquired.






24. A test for conditional het-eroskedasticity in the error term of a regression.






25. The amount of book value (also called carrying value) of common equity per share of common stock - calculated by dividing the book value of shareholders' equity by the num-ber of shares of common stock outstanding.






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






27. A set of observations on a variable's out-comes in different time periods.






28. Unearned fees are recognized when a company receives cash payment for fees prior to earning them.






29. Assets that are expected to bene-fit the company over an extended period of time (usually more than one year).






30. A permissible delivery procedure used by futures market participants - in which the long and short arrange a delivery pro-cedure other than the normal procedures stipu-lated by the futures exchange.






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






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






33. A forward contract calling for one party to make a fixed interest payment and the other to make an interest pay-ment at a rate to be determined at the contract expiration.






34. The principles governing equivalence relationships between cash flows with different dates.






35. An electronic payment system used widely in Europe and Japan.






36. In the con-text of private company valuation - valuation model based on an assumption of a constant growth rate of free cash flow to the firm or a con-stant growth rate of free cash flow to equity.






37. A stage of growth in which a company typically enjoys rapidly expanding markets - high profit margins - and an abnormally high growth rate in earnings per share.






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






39. (Aka forward rate agreement)






40. Potential future payments to the seller that are contingent on the achieve-ment of certain agreed on occurrences.






41. A policy regime is one that selects a target path for the exchange rate with interven-tion in the foreign exchange market to achieve that path.






42. The normal density with mean equal to 0 and standard deviation (0') equal to l.






43. A measure of central tendency computed by taking the nth root of the product of n non-negative values.






44. Method used under IFRS to estimate the defined benefit obligation; for each period in which employees provide services - they earn a portion of the post-employment bene-fits that the company has promised to pay.






45. The amount of dispersion rela-tive to a reference value or benchmark.






46. 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).






47. The intercept and slope coefficient(s) of a regression.






48. A method of revenue recognition in which - in each accounting period - the company estimates what percentage of the contract is complete and then reports that per-centage of the total contract revenue in its income statement.






49. The single-period interest rate for a completely risk-free security if no infla-tion were expected.






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