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CFA Level2 Vocab

Subjects : certifications, cfa
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. Any test (or procedure) concerned with parameters or whose validity depends on assumptions concerning the population generat-ing the sample.






2. The practice of determining a model by extensive searching through a dataset for statisti-cally significant patterns.






3. 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.






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






5. The most recent quarterly dividend multiplied by four.






6. When liabilities translated at the current exchange rate are greater than assets translated at the current exchange rate. Liabilities exposed to translation gains or losses exceed the exposed assets.






7. A record of foreign investment in a country minus its investment abroad.






8. The value of skills and knowledgepossessed by the workforce.






9. The sum of the sample observations - divided by the sampfe size.






10. A method of identifying the basic elements of the overall capitalization rate.






11. Unex-pected earnings per share divided by the standard deviation of unexpected earnings per share over a specified prior time period.






12. The difference between the market price of the option and its intrinsic value - determined by the uncertainty of the underlying over the remaining life of the option.






13. The discount possibly applied by the market to the stock of a company operating in multiple - unrelated businesses.






14. A measure of central tendency computed by taking the nth root of the product of n non-negative values.






15. The sum of the real risk-free interest rate and the inflation premium.






16. An estimate of a parameter that involves combining (pooling) observations from two or more samples.






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






18. A method of revenue recog-nition in which the seller does not report anyprofit until the cash amounts paid by the buyer-including principal and interest on any financingfrom the seller-are greater than all the seller'scosts for the merchandise sold.






19. The rule that the joint probability of events A and B equals the probability of A given B times the probability of B.






20. With respect to revenue recognition - a method that s ecifies that the portion of the total profit of the sale that . s recognized in each pe riod is deter-mined by the percentage of the total sales price for which the seller has received cash.






21. In the context of inventory management - the need for inventory as part of the routine production-sales cycle.






22. A merger in which the company being purchased becomes a subsidiary of the purchaser.






23. Resources controlled by an enterprise as a result of past events and from which future eco-nomic benefits to the enterprise are expected to flow.






24. A multivariate classification technique used to discriminate between groups - such as companies that either will or will not become bankrupt during some time frame.






25. With respect to the format of a bal-ance sheet - a format in which assets - liabilities - and equity are listed in a single column.






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






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






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






29. The actual cash that would be avail-able to the company's investors after making all investments necessary to maintain the company as an ongoing en terprise (also referred to as free cash flow to the firm); the internally generated funds that can be






30. Heightened uncertainty regarding a company's ability to meet its various obligations because of lower or negative earnings.






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






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






33. A company's profits on its usual business activities before deducting taxes.






34. A long-term pattern of movement in a partic-ular direction.






35. A series of put options on an interest rate - with each option expiring at the date on which the floating loan rate will be reset - and with each option having the same exercise rate. A floor in general can have an underlying other than the interest






36. An option strategy in which a long position in an asset is combined with a long posi-tion in a put.






37. Is Derivatives in which the payoffs occur if a specific event occurs; generally referred to as options.






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






39. The process of identifYing the level of risk an entity wants - measuring the level of risk the entity currently has - taking actions that bring the actual level of risk to the desired level of risk - and monitoring the new actual level of risk so tha






40. A graph of a frequency distri-bution obtained by drawing straight lines join-ing successive points representing the class frequencies.






41. Commercial and investmentbanks that make markets in derivatives.






42. The ratio ofthe percentage change in operating income to the percentage change in units sold; the sensitivity of operating income to changes in units sold.






43. Amounts owed to the company from parties other than customers.






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






45. A specialized computer program or a spreadsheet that solves for the portfolio weights that will result in the lowest risk for a specified level of expected return.






46. Selling a product in slightly altered forms to different groups of consumers.






47. The use of inven-tory as collateral for a loan; similar to a trust receipt arrangement except there is a third party (i.e. - a warehouse company) that supervises the inventory.






48. 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






49. A method of revenue recognition in which - in each accounting period - the company estimates what percentage of the contract is complete and then reports that per-centage of the total contract revenue in its income statement.






50. Items that affect comprehensive income but which bypass the income statement.







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