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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 method of account-ing for joint ventures where the venturer's share of the assets - liabilities - income and expenses of the joint venture are combined on a line-by-line basis with similar items on the venturer's financial statements.






2. The original time to maturity on a swap.






3. The analysis of the strength of the linear relationship between two data series.






4. Interest earned but not yet paid.






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






6. Offering two or more products for sale as a set.






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






8. The value of an option at expiration.






9. 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 .






10. A yield on a basis comparable to the quoted yield on an interest-bearing money market instrument that pays interest on a 360-<iay basis; the annualized holding period yield - assuming a 360-<iay year.






11. As an approach to valuing a company - the sum of the value of the company - assuming no use of debt - and the net present value of any effects of debt on company value.






12. Assets and liabilities with value equal to the amount of currency con-tracted for - a fixed amount of currency. Examples are cash - accounts receivable - mortgages receiv-able - accounts payable - bonds payable - and mort-gages payable. Inventory is






13. A pre-offer takeover defense mechanism that makes it prohibitively costly for an acquirer to take control of a target without the prior approval of the target's board of directors.






14. The day that the company actually mails out (or electronically transfers) a dividend payment.






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






16. An option strategy involving the purchase of a Rut and a call wi th the same exercise price. A straddle is based on the expectation of high volatili ty of the underlying.






17. The expected value (the probability-weighted average) of squared deviations from a random variable's expected value.






18. Describes a distribution that is more peaked than a normal distribution.






19. The quantity of goods and services that a country exports to pay for its imports of goods and services.






20. Trading ex-dividend refers to shares that no longer carry the right to the next dividend payment.






21. The amount at which an asset or liability is valued according to account-ing principles.






22. A merger involving companies inthe same line of business - usually as competitors.






23. A finite set of level sequential cash flows.






24. A rate of return that reflects the rela-tionship between differently dated cash flows; a discount rate.






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






26. 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.






27. A financial statement that provides information about a company's prof-itability over a stated period of time.






28. The evaluation of risk-adjusted performance; the evaluation of invest-ment skill.






29. The line with an inter-cept point equal to the risk-free rate that is tangent to the efficient frontier of risky assets; represents the efficient frontier when a risk-free asset is available for investment.






30. The ratio of the percentage change in net income to the percentage change in units sold; the sensitivity of the cash flows to owners to changes in the number of units pro-duced and sold.






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






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






33. Under U.S. GAAP - a measure used in estimating a defined-benefit pen-sion plan's liabilities - defined as 'the actuarial present value of benefits (whether vested or non-vested) attributed by the pension benefit formula to employee service rendered b






34. 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.






35. The number of successes in n Bernoulli trials for which the probability of success is constan t for all trials and the trials are independent.






36. The ratio of a set of observations' standard deviation to the observa-tions' mean value.






37. The amount of funds originally invested in a project or instrument; the face value to be paid at maturity.






38. The change in the bond price for a 1 basis point change in yield. Also called basis point value (BPV).






39. An illiquidity discount that occurs when an investor sells a large amount of stock rela-tive to its trading volume (assuming it is not large enough to constitute a controlling ownership).






40. The autocorrelation of the error term.






41. A straight-line relationship - as opposed to a relationship that cannot be graphed as a straight line.






42. Segment revenue divided by seg-ment assets .






43. A method of presentation of accounting transactions in which effects on assets appear at the left and effects on liabilities and equity appear at the right of a central dividing line; also known as T-account format.






44. The standard deviation of the differ-ences between a portfolio's returns and its bench-mark's returns; a synonym of active risk.






45. The accounting system of recording transactions in which every recorded transaction affects at least two accounts so as to keep the basic accounting equation (assets = liabilities + owners' equity) in balance.






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






47. A rule explaining the expected value of a random vari-able in terms of expected values of the random variable conditional on mutually exclusive and exhaustive scenarios.






48. An acquisition in which the acquirer gives the target company's shareholders some combination of cash and securities in exchange for shares of the target company's stock.






49. The probability of a Type I error in testing a hypothesis.






50. CMT A hypothetical U.S. Treasury note with a constant maturity. A CMT exists for various years in the range of 2 to







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