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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 subset of a larger popula-tion created in such a way that each element of the population has an equal probability of being selected to the subset.






2. 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.






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






4. The currency in which finan-cial statement amounts are presented.






5. A graphical depic-tion of a company's investment opportunities ordered from highest to lowest expected return. A company's optimal capital budget is found where the investment opportunity schedule inter-sects with the company's marginal cost of capit






6. Approach that values a private company based on the values of the underlying assets of the entity less the value of any related liabilities.






7. A loss in value caused bychanges in price levels. Monetary assets experi-ence purchasing power losses during periods ofinflation.






8. A contract calling for the purchase of an individual stock - a stock portfolio - or a stock index at a later date at an agreed-upon price.






9. The system of principles - policies - procedures - and clearly defined responsi-bilities and accountabilities used by stakeholders to overcome the conflicts of interest inherent in the corporate form.






10. Time thought of as advancing in extremely small increments.






11. A model of stock valuation that views intrinsic value of stock as the sum of book value per share plus the present value of the stock's expected future residual income per share.






12. An option that allows the holder to buy (if a call) or sell (if a put) an underlying cur-rency at a fixed exercise rate - expressed as an exchange rate.






13. 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.






14. (No longer allowed under U.S. GAAP or IFRS.)






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






16. Segment profit (loss) divided by seg-ment assets.






17. 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






18. Financial statements in which all elements (accounts) are stated as a per-centage of a key figure such as revenue for an income statement or total assets for a balance sheet.






19. A transaction in which a company buys back its own shares. Unlike stock dividends and stock splits - share repurchases use corporate cash.






20. A quantitative restriction on the import of a particular good - which specifies the maximum amount that can be imported in a given time period.






21. A balance sheet organized so as to group together the various assets and liabilities into subcategories (e.g. - current and noncurrent) .






22. Mutually exclusive proj-ects compete directly with each other. For example - if Projects A and B are mutually exclusive - you can choose A or B - but you cannot choose both. n Factorial For a positive integer n - the product of the first n positive i






23. Assets lacking physical substance - such as patents and trademarks.






24. A si gle numerical estimate of an unknown quantity - such as a population parameter.






25. 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.






26. Limits imposed by a futures exchange on the price change that can occur from one day to the next.






27. Tax expenses that have been recognized and recorded on a company's income statement but which have not yet been paid.






28. The property of having a non-constant variance; refers to an error term with the property that its variance differs across observations.






29. The difference between inventory reported as FIFO and 'nventory reported as LIFO (FIFO inventory value less LIFO inventory val e).






30. Temporary differ-ences that result in a red uction of or deduction from taxal:J e income in a future period when the balance sheet item is n~ covered or settled.






31. A measure of goodness-of-fit of a regres-sion that is adjusted for degrees of freedom and hence does not automatically increase when another independent variable is added to a regression.






32. To reduce the value of a future payment in allowance for how far away it is in time; to calcu-late the present value of some future amount. Also - the amount by which an instrument is priced below its face value.






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






34. A spontaneous form of credit in which a purchaser of the goods or service is financing its purchase by delaying the date on which payment is made.






35. With reference to statistical inference - astatement about one or more populations.






36. Approach to translating for-eign currency financial statements for consolida-tion in which all assets and liabilities are translated at the current exchange rate. The cur-rent rate method is the prevalent method of translation.






37. Activities related to obtaining or repaying capital to be used in the business (e.g. - equity and long-term debt).






38. The elimination or phasing out of reg-ulations on economic activity.






39. Investments in which the investor has no signifi-cant influence or control over the operations of the investee.






40. With reference to the error term of a regression - having a variance that differs across observations.






41. 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.






42. Increases in economic benefits in the form of inflows or enhancements of assets - or decreases of liabilities that result in an increase in equity (other than increases resulting from contribu-tions by owners) .






43. The relationship amongputs - calls - and forward contracts.






44. With reference to estimators - describes an estimator for which the probability of estimates close to the value of the population parameter increases as sample size increases.






45. An estimation formula; the formula used to compute the sample mean and other sample statistics are examples of estimators.






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






47. PIE The price-to-earnings ratio that is fair - warranted - or justified on the basis of forecasted fundamentals.






48. Huidity When receipts lag - creating pres-sure fmm the decreased available funds.






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






50. The existence of an exact linear relation between two or more independent vari-ables or combinations of independent variables.