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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. Ratio of sales on credit to the average balance in accounts receivable.






2. A share of any profits that is paid to the general partner (manager) of an investment partnership - such as a private equity or hedge fund - as a form of compensation designed to be an incentive to the manager to maximize per-formance of the investme






3. As used in option pricing - the standard deviation of the continuously compounded returns on the underlying asset.






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






5. Factors related to the company's internal performance - such as factors relating to earnings growth - earnings variability - earnings momentum - and financial leverage.






6. When parties agree to exchange only the net amount owed from one party to the other.






7. Said of a sale in which proceeds are to be paid in installments over an extended period of time.






8. A random variable that can take on at most a countable number of possi-ble values.






9. 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






10. The differ-ence between reported net income on an accrual basis and the cash flows from operating and investing activities compared to the average net operating assets over the period.






11. Individuals or companies b hat execute fu tures transactions for other parties off the exchange.






12. A finance perspective on capital markets that deals with the relationship of price to intrinsic value. The traditional efficient mar-kets formulation asserts that an asset's price is the best available estimate of its intrinsic value. The rational ef






13. A condition in the futures markets in which the benefits of holding an asset exceed the costs - leaving the futures price less than the spot price.






14. An investment decision rule that accepts projects or investments for which the IRR is greater than the opportunity cost of capital.






15. The portfolio with the each given level of minimum variance for expected return.






16. The operational flexibility to adjust prices when demand varies from forecast. For example - when demand exceeds capacity - the company could benefit from the excess demand by increasing prices.






17. The hypothesis to be tested.






18. A country that is borrowing more from the rest of the world than it is lending to it.






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






20. A model that specifies an asset's value relative to the value of another asset.






21. Nonconvertible - noncallable preferred stock with a specified divi-dend rate that has a claim on earnings senior to the claim of common stock - and no maturity date.






22. The amount the company estimates that it can sell the asset for at the end of its useful life.






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






24. The condition in futures markets in which futures prices are lower than expected spot prices.






25. Aka marking to market.






26. The establishment of objectives for individuals - groups - or divisions of an organiza-tion that takes into account the allocation of an acceptable level of risk.






27. The risk that a company will suffer an extended diminution in market value relative to other companies in the same industry due to a demonstrated lack of concern for environmental - social - and governance risk factors.






28. The possibility that when we use a time-series sample - our statistical conclusion may be sensitive to the starting and ending dates of the sample.






29. Agency costs that are incurred despite adequate monitoring and bonding of management.






30. A valuation that sums the estimated values of each of a company's busi-nesses as if each business were an independent going concern.






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






32. With reference to the cash flow statement - a format for the presentation of the statement in which cash flow from operat-ing activities is shown as operating cash receipts less operating cash disburseme ts.






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






34. A legal corporate entity whose shareholders are its members. The members of the exchange have the privilege of executing transactions directly on the exchange.






35. The prooability of an observation - given a par ticular set of conditions.






36. A measurement scale that has all the characteristics of interval measurement scales as well as a true zero point as the origin.






37. The expected return on an invest-ment minus the risk-free rate.






38. Large industry groupings.






39. Hirschman Index A measure of rna ket concentration that is calculated by summing the squared mar et shares for competing companies in an industry; high HHI readings or mergers that would result in large HHI increases are more likely to result in regu






40. 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.






41. Costs of inven tories including costs of purchase - costs of conversion - other costs to bring the inventories to their present location and condition - and the allocated portion of) fixed production overhead costs.






42. Quantiles that divide a distribution into five equal parts.






43. The day that options are granted to employees; usually the date that compensation expense is measured if both the number of shares and option price are known.






44. A legal contract specifYing the terms of a bond issue.






45. A probability based on logical analysis rather than on observation or personal judgment.






46. A bank commitment to extend credit up to a pre-specified amount; the commitment is considered a short-term liability and is usually in effect for 364 days (one day short of a full year).






47. A method of valuing prop-erty based on site value plus current construction costs less accrued depreciation.






48. The mix of a company's variable costsand fixed costs.






49. A variation of a floating-rate note that has some type of unusual characteristic such as a leverage factor or in which the rate moves opposite to interest rates.






50. An option strategy in which a position in an asset is converted to a risk-free position with a position in a specific number of options. The number of options per unit of the underlying changes through time - and the position must be revised to maint