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






2. For accounting purposes - the spot exchange rate on the balance sheet date.






3. An index fund position cre-ated by combining risk-free bonds and futures on the desired index.






4. The difference between the actual value per share and the no-growth value per share.






5. A striNgent measure of liquidity th t ind'cates a company's ab'li ty to satisfY current liabilities with its most liquid assets - calcu-lated as (cash + short-tenn marketable invest-ments + receivables) divided by current liabilities.






6. The difference between reported net income on an accrual basis and the cash flows from operating and investing activities.






7. Taken as a deduction in arriving at net income.






8. The owners' remaining claim on the company's assets after the liabilities are deducted.






9. The unsold units of product on hand.






10. Financial ratios involving bal-ance sheet items only.






11. The risk that govern-mental laws and regulations directly or indirectly affecting a company's operations will change with potentially severe adverse effects on the com-pany's continued profitabiliny and even its long-term sustainability.






12. Arrangements that do not result in additional liabilities on the balance sheet but nonetheless create economic obligations.






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






14. Debt issued with warrants that give the bondholder the right to purchase equity at prespecified terms.






15. An option strategy involving the purchase of one option and sale of another option that is identical to the first in all respects except either exercise price or expiration.






16. The ratio of a stock's market price to some m asure of va ue per share.






17. A type of finance lease - from a lessor perspective - where the present value of the lease payments (lease receivable) equals the carry-ing value of the leased asset. The revenues earned by the lessor are financing in nature.

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18. A quantitative measure of skew (lack of symmetry); a synonym of skew.






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






20. When settling a contract - the risk that one party could be in the process of paying the counterparty while the counterparty is declar-ing bankruptcy.






21. The periodic investment of a fixed amount of money.






22. A present value model of stock value that views the intrinsic value of a stock as present value of the stock's expected future dividends.






23. Differences between tax and financial reporting of revenue (expenses) that will not be reversed at some future date. These result in a difference between the company's effective tax rate and statutory tax rate and do not result in a deferred tax item






24. Debt and equity secu-rities not classified as either held-to-maturity or held-for-trading securities. The investor is willing to sell but not actively planning to sell. In general - available-for-sale securities are reported at fair value on the bala






25. With respect to double-entry accounting - a credit records increases in liability - owners' equity - and revenue accounts or decreases in asset accounts; with respect to borrowing - the willing-ness and ability of the borrower to make promised paymen






26. Diminishment in value as a result of car-rying (book) value exceeding fair value and/or recoverable value.






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






28. The risk associated with accounting standards that vary from country to country or with any uncertainty about how certain transac-tions should be recorded.






29. A solvency ratio calculated as EBIT divided by interest payments.






30. A function with non-negative values such that probability can be described by areas under the curve graphing the function.






31. A stage of growth in which the com-pany reaches an equilibrium in which investment opportunities on average just earn their opportu-nity cost of capital.






32. In the fixed income markets - to price a security on the basis of valuation-relevant char-acteristics (e.g. - debt-rating approach).






33. Valuation measures and other factors related to share price or the trading characteristics of the shares - such as earn-ings yield - dividend yield - and book-to-market value.






34. Agreements between the company as borrower and its creditors.






35. The probability of correctly rejecting the null-that is - rejecting the null hypothesis when it is false.






36. The setting of overall policies and standards in risk management






37. Valuation indi-cators that compare a stock's performance during a period either to its own past performance or to the performance of some group of stocks.






38. An option that gives the holder the right to sellan underlying asset to another party at a fixedprice over a specific period of time.






39. A basis for reporting investment income in which the investing entity recognizes a share of income as earned rather than as divi-dends when received. These transactions are typi-cally reflected in Investments in Associates or Equity Method Investment






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






41. P/E calculated on the basis of a forecast of EPS; a stock's current price divided by next year's expected earnings.






42. Assets that are expected to provide economic benefits over a future period of time - typically greater than one year.






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






44. I) An interest rate swap involving two floating rates. 2) A swap in which both parties pay a floating rate.






45. A poison pill takeover defense that dilutes an acquirer's ownership in a target by giv-ing other existing target company shareholders the right to buy additional target company shares at a discount.






46. Any rate used in finding the present value of a future cash flow.






47. A valuation ratio calculated as price per share divided by book value per share.






48. A person or country has a comparative advantage in an activi ty if that person or country can perform the activity at a lower opportunity cost than anyone else or any other country.






49. The unlevered beta; reflects the business risk of the assets; the asset's systematic risk.






50. Short-term obligations - such as accounts payable - wages payable - or accrued liabil-ities - that are expected to be settled in the near future - typically one year or less.