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. An approach to trading that uses pairs of closely re ated stocks - buying the relatively undervalued stock and selling short the relatively overvalued stock.






2. Promises by the company to pay benefits in the future - other than pension benefits - such as life insurance premiums and all or part of health care insurance for its retirees.






3. 1) The simultaneous purchase of an undervalued asset or portfolio and sale of an over-valued but equivalent asset or portfolio - in order to obtain a riskless profit on the price differential. Taking advantage of a market inefficiency in a risk-free






4. The investigation of issues relating to the accuracy of reported accounting results as reflections of economic per-formance; quality of earnings analysis is broadly understood to include not only earnings manage-ment - but also balance sheet manageme






5. A method of accounting for a business combination where the acquirer is required to measure each identifiable asset and liability at fair value. This method was the result ofa joint project of the IASB and FASB aiming at convergence in standards for






6. A European-style option with a value at maturity equal to the difference between the stock price at maturity and the average stock price during the life of the option - or $0 - whichever is greater.






7. Instruments that payinterest as the difference between the amountborrowed and the amount paid back.






8. The accuracy with which a company's reported financials reflect its operat-ing performance and their usefulness for forecast-ing future cash flows.






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






10. 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.






11. With reference to regression analysis - the estimated values of the population intercept and population slope coeffi-cien t(s) in a regression.






12. The risk associated with interest rates - exchange rates - and equity prices.






13. A number between - 1 and + 1 that measures the co-movement (linear association) between two random variables.






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






15. A form of data min-ing that applies information developed by previ-ous researchers using a dataset to guide curren t research using the same or a related dataset.






16. Probabilities that generally do not vary from person to person; includes a pri-ori and objective probabilities.






17. The amount at which an asset or liability is valued for tax purposes.






18. A variation of VAR that reflects the risk of a company's cash flow instead of its market value.






19. Any outcome or specified set of outcomes of a random variable.






20. 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 .






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






22. Projects in which influential managers want the corporation to invest. Often - unfortu-nately - pet projects are selected without undergo-ing normal capital budgeting analysis.






23. A qualitative-dependent-variable multiple regression model based on the normal distribution.






24. A method of accounting in which combined companies were portrayed as if they had always operated as a single economic entity. Called pooling of interests under U.S. GAAP and uniting of interests under IFRS. (No longer allowed under U.S. GAAP or IFRS.






25. Factor models that combine features of more than one type of factor model.






26. In accounting contexts - cash on hand (e.g. - petty cash and cash not yet deposited to the bank) and demand deposits held in banks and similar accounts that can be used in payment of obligations.






27. The rate of return required by suppliers of capital for an individual source of a company's funding - such as debt or equity.






28. The average squared deviation below the mean.






29. An amount or percentage deducted from the value of an owner-ship interest to reflect the relative absence ofmarketability.






30. A correlation that misleadingly points towards associations between variables.






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






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






33. 1) An agent who executes orders to buy orsell securities on behalf of a client in exchange for a commission. 2) See Futures commission merchants.






34. A merger in which one company ceases to exist as an identifiable entity and all its assets and liabilities become part of a purchasing company.






35. The probability of an event given (conditioned on) another event.






36. Securities held by banks or other financial intermediaries for trading purposes.






37. Momentum indicators based on price.






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






39. An event or piece of information that causes the marketplace to re-evaluate the prospects of a company.






40. A weighted average of the after-tax required rates of return on a company's common stock - preferred stock - and long-term debt - where the weights are the fraction of each source of financing in the company's target capital structure.






41. Bias that may result when failed or defunct companies are excluded from member-ship in a group.






42. Financial statements that are not accompanied by an auditor's opinion letter.

Warning: Invalid argument supplied for foreach() in /var/www/html/basicversity.com/show_quiz.php on line 183


43. 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.






44. 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.






45. To defer the decision to invest in a future projecn until the outcome of some or all of a current project is known. -Projects are sequenced through time - so that investing iN a project creates the option to invest in future projects.






46. With respect to double-entry accounting - a debit records increases of asset and expense accounts or decreases in liability and owners' equity accounts.






47. Regulation that allowsprices to reflect only the actual average cost ofproduction and no monopoly profits.






48. An updated probability that reflects or comes after new information.






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






50. An entity (partnership - corporation - or other legal form) where control is shared by two or more entities called venturers.