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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 profitability ratio calcu-lated as net income divided by average sharehold-ers' equity.






2. The amount of variability pres-ent without comparison to any reference point or benchmark.






3. A form of data min-ing that applies information developed by previ-ous researchers using a dataset to guide curren t research using the same or a related dataset.






4. Options that - if exercised - would result in the value received being worth more than the payment required to exercise.






5. A measure of the expected annual cash flow from the operation of a real estate investment after all expenses but before taxes.






6. The process of allocating the cost of intangible long-term assets having a finite useful life to accounting periods; the allocation of the amount of a bond premium or discount to the periods remaining until bond maturity.






7. Financial instru-ments that an entity chooses to measure at fairvalue per lAS 39 or SFAS 159. Generally - the elec-tion to use the fair value option is irrevocable.






8. The number of shares that target stockholders are to receive in exchange for each of their shares in the target company.






9. An act passed by the U.S. Con-gress in 1933 that specifies the financial and other significant information that investors must receive when securities are sold - prohibits misrepresenta-tions - and requires initial registration of all public issuance






10. With reference to a sample - the mean of the absolute values of deviations from the sample mean.






11. A purchase involving a buyer having essentially no material synergies with the target (e.g. - the purchase of a private company by a company in an unrelated industry or by a private equity firm would typically be a financial transaction) .






12. The party obtaining the use of an asset through a lease.






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






14. The return that an investorearns during a specified holding period; a syn-onym for total return.






15. An approach for estimating a country's equity risk premium. The market rate of return is estimated as the sum of the dividend yield and the growth rate in dividends for a market index. Subtracting the risk-free rate of return from the estimated marke






16. A measure of sensitivity; the incremental change in one variable with respect to an incre-mental change in another variable.






17. A liquidity ratio that esti-mates the number of days that an entity could meet cash needs from liquid assets; calculated as (cash + short-term marketable investments + receivables) divided by daily cash expenditures.






18. The ability to terminate a proj-ect at some future time if the financial results are disappointing.






19. The percentage of a market that a particular fi rm supplies; used as the primary measure of monopoly power.






20. With reference to portfolio strategies - the application of a strategy's portfolio selection rules to historical data to assess what would have been the strategy's historical performance.






21. 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.






22. The amount to which a payment or series of payments will grow by a stated future date.






23. The difference between the third and fi rst quarti les of a dataset.






24. 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.






25. A result indicating that the null hypothesis can be rejected; with reference to an estimated regression coefficient - frequently understood to mean a result indicating that the corresponding population regression coefficient is different from O.






26. Costs (e.g. - executives' salaries) that cannot be directly matched with the timing of rev-enues and which are thus expensed immediately.






27. Unsecured short-term corporate debt that is characterized by a single payment at maturity.






28. A method for accounting for the effect of options (and warrants) on earnings per share (EPS) that specifies what EPS would have been if the options and warrants had been exercised and the company had used the pro-ceeds to repurchase common stock.






29. The most frequently occurring value in a set of observations.






30. Describes a scale constructed so that equal intervals on the vertical scale represent equal rates of change - and equal intervals on the horizontal scale represent equal amounts of change.






31. An annuity with a first cash flow that is paid one period from the present.






32. The incor-poration of production planning into inventory management. A MRP analysis provides both a materials acquisition schedule and a production schedule.






33. An activity ratio equal to the number of days in period divided by receivables turnover.






34. A swap in which the floating rate is the cumulative value of a single unit of currency invested at an overnight rate dur-ing the settlement period.






35. 1) The simultaneous purchase of an undervalued asset or portfolio and sale of an over-valued but equivalent asset or portfolio - in order to obtain a riskless profit on the price differential. Taking advantage of a market inefficiency in a risk-free






36. The single-period interest rate for a completely risk-free security if no infla-tion were expected.






37. Observations over individual units at a point in time - as opposed to time-series data.






38. Financial statements that are not accompanied by an auditor's opinion letter.

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39. An approach to trading that uses pairs of closely re ated stocks - buying the relatively undervalued stock and selling short the relatively overvalued stock.






40. Economic characteristics of a busi-ness such as profitability - financial strength - and risk.






41. PIE PI Es based on normalized EPS data.






42. The process of determining the value of an asset or service on the basis of variables per-ceived to be related to future investment returns - or on the basis of comparisons with closely similar assets.






43. Unexpected earnings divided by the standard deviation of analysts' earnings forecasts.






44. Segment profit (loss) divided by segment revenue.






45. 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.






46. Uncorrelated; at a right angle.






47. Common-size analysis using only one reporting period or one base financial state-ment; fo r example - an income statement in which all items are stated as percentages of sales.






48. The amount at which an asset or liability is valued for tax purposes.






49. 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.






50. Time thought of as advancing in dis-tinct finite increments.