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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 risk associated with the pos-sibility that a payment currently due will not be made.






2. The expected excess return on the market over the risk-free rate.






3. The combination of the underlying - puts - calls - and risk-free bonds that replicates a forward contract.






4. With respect to the format of the income statement - a format that presents a subtotal for gross profit (revenue minus cost of goods sold).






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






6. The condition in a financial mar-ket in which two equivalent financial instruments or combinations of financial instruments can sell for only one price. Equivalent to the principle that no arbitrage opportunities are possible.






7. The percentage of total earnings paid out in dividends in any given year (in per-share terms - DPS/ EPS).






8. The procedure of drawing a sample to satisfy the definition of a simple ran-dom sample.






9. The positive square root of semivari-ance (sometimes called semistandard deviation) .






10. A tactic used by acquirers to circumvent target management's objections to a proposed merger by submitting the proposal directly to the target company's board of directors.






11. The use of inventory as collat-eral for a loan. Though the lender has claim to some or all of the company's inventory - the com-pany may still sell or use the inventory in the ordi-nary course of business.






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






13. A means of settling payments in which the amount owed by the first party to the second is netted with the amount owed by the sec-ond party to the first; only the net difference is paid.






14. A forward contract to enter into a swap.






15. CreaLing a contrac t with standard and generally accepted terms - which makes it moreacceptable to a broader group of participants.






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






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






18. The extent to which a company's operations are predictable with substantial confidence.






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






20. A forecasting approach that involves moving from international and national macroeconomic forecasts to industry forecasts and then to individual company and asset forecasts.






21. PIE PI Es based on normalized EPS data.






22. Computer-generated sensitivity or sce-nario analysis that is based on probability models fo r the factors that drive outcomes.






23. Private equity investors in development-stage companies.






24. Orders to buy or sell that are too large for the liquidity ordinarily available in dealer networks or stock exchanges.






25. A loan in which the interest rate is reset at least once after the starting date.






26. A procedure used in certain deriva-tive transactions that specifies that the long and short parties engage in the equivalent cash value of a delivery transaction.






27. Income as reported on the income statement - in accordance with prevailing account-ing standards - before the provisions for income tax expense.






28. Very liquid short-tenn investments - usually maturing in 90 days or less.






29. 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.






30. 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.






31. A time series in which the value ofthe series in one period is the value of the series in the previous period plus an unpredictable random error.






32. The amount of money that a trader deposits in a margin account. The term is derived from the stock market practice in which an investor bor-rows a portion of the money required to purchase a certain amount of stock. In futures markets - there is no b






33. An estimate of the average time that elapses between paying suppliers for materi-als and collecting cash from the subsequent sale of goods produced.






34. Potential future payments to the seller that are contingent on the achieve-ment of certain agreed on occurrences.






35. Amounts that a business owes to its vendors for goods and services that were pur-chased from them but which have not yet been paid.






36. The ability to react and adapt to financial adversities and opportunities.






37. The relationship between the option price and the underlying price - which reflects the sensi-tivity of the price of the option to changes in the price of the underlying.






38. 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.






39. Dummy variables used as dependent variables rather than as inde-pendent variables.






40. A calculation of yield that is annualized using the ratio of 365 to the number of days to maturity. Bond equivalent yield allows for the restatement and comparison of securities with different compounding periods.






41. The date on which the parties to a swap make payments.






42. Revenue after adjustments (e.g. - for estimated returns or for amounts unlikely to be collected).






43. The estimated fair value of the price multiple - usually based on fore-casted fundamentals or comparables.






44. The fixed rate at which the holder of an interest rate option can buy or sell the underlying.






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






47. A depreciation method tHat allocates the cost of a long-lived asset based on-actual usage during the period .






48. The remaining (undepreciated) bal-ance of an asset's purchase cost. For liabilities - the face value of a bond minus any unamortized dis-count - or plus any unamortized premium.






49. In reference to corporate taxes - a system that imputes - or attributes - taxes at only one level of taxation. For countries using an imputation tax system - taxes on dividends are effectively levied only at the shareholder rate. Taxes are paid at th






50. The probability of an event estimated as a relative frequency of occurrence.