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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. An option strategy involving the hold-ing of an asset and sale of a call on the asset.






2. A measure of the co-movement (linearassociation) between two random variables.






3. The accounting system of recording transactions in which every recorded transaction affects at least two accounts so as to keep the basic accounting equation (assets = liabilities + owners' equity) in balance.






4. Options that are far in-the-money.






5. A merger involving the pur-chase of a target ahead of the acquirer in the value or production chain; for example - to acquire a supplier.






6. Assets and liabilities with value equal to the amount of currency con-tracted for - a fixed amount of currency. Examples are cash - accounts receivable - mortgages receiv-able - accounts payable - bonds payable - and mort-gages payable. Inventory is






7. A factor related to the econ-omy - such as the inflation rate - industrial produc-tion - or economic sector membership. acroeconomic factor model A multifac tor model in which the factors are surprises in macroeco-nomic variables that significan tly






8. The actual value of a variable minus its pre-dicted (or expected) value.






9. An approach to investing that typically begins with macroeconomic forecasts.






10. The part of the execution step of the portfolio management process that involves the implementation of port-folio decisions by trading desks.






11. A linear regression model with two or more independent variables.






12. The annual percentage change in real CDP.






13. Behavior on the part of a firm that allows it to comply with the letter of the law but violate the spirit - significantly lessening the law's effects.






14. 1) An agent who executes orders to buy orsell securities on behalf of a client in exchange for a commission. 2) See Futures commission merchants.






15. A sample measure of the degree of a distribution's peakedness in excess of the normal distribution's peakedness.






16. The currency of the country where a company is located.






17. A criterion asserting that the optimal portfolio is the one that minimizes the probability that portfolio return falls below a threshold level.

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18. The ratio of cash dividends paid to earnings for a period.






19. A floating-rate note or bond in which the coupon is adjusted to move opposite to a benchmark interest rate.






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






21. Arrangements that do not result in additional liabilities on the balance sheet but nonetheless create economic obligations.






22. The cash flow available to a company's common shareholders after all operat-ing expenses - interest - and principal payments have been made - and necessary investments in working and fixed capital have been made.






23. Debt (fixed-income) securities that a company intends to hold to matu-rity; these are presented at their original cost - updated for any amortization of discounts or pr.emiums.






24. The analysis of the total variability of a dataset (such as observations on the dependent variable in a regression) into components representing different sources of variation; with reference to regression - ANOVA provides the inputs for an F-test of






25. A variation of VAR that reflects the risk of a company's cash flow instead of its market value.






26. A process used in a deliverable forward contract in which the long pays the agreed-upon price to the short - which in turn delivers the underlying asset to the long.






27. An Activity ratio calculated as total revenue divided by average net fixed assets.






28. Assets and liabili-ties that are not monetary assets and liabilities. Nonmonetary assets include inventory - fixed assets - and intangibles - and nonmonetary liabili-ties include deferred revenue.






29. A level of inventory beyond anticipated needs that provides a cushion in the event that it takes longer to replenish inventory than expected or in the case of greater than expected demand.






30. Options on individual stocks; also known as stock options.






31. CMT A hypothetical U.S. Treasury note with a constant maturity. A CMT exists for various years in the range of 2 to






32. The risk associated with operating earnings. Operating earnings are uncertain because total revenues and many of the expendi-tures contributed to produce those revenues are uncertain.






33. Interest earned but not yet paid.






34. Risk for which investors demand com-pensation for bearing (e.g. - equity risk - company-specific factors - macroeconomic factors).






35. Investigation and analysis in support of a recommendation; the failure to exercise due diligence may sometimes result in liability accord-ing to various securities laws.






36. The mix of debt and equity that a company uses to finance its business; a company's specific mixture of long-term financing.






37. A merger or acquisition in which target shareholders are to receive shares of the acquirer's common stock as compensation.






38. A company's ability to satisfY its short-term obligations using assets that are most readily con-verted into cash; the ability to trade a futures con-tract - either selling a previously purchased contract or purchasing a previously sold contract.






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






40. The value of the U.S. dollar in terms of other currencies in the foreign exchange market.






41. With reference to time-series mod-els - a model in which the growth rate of the time series as a function of time is constant.






42. A regression estimation technique that addresses heteroskedasticity of the error term.






43. A bias caused by using information that was not available on the test date.






44. A portfolio offering the highest expected return for a given level of risk as mea-sured by variance or standard deviation of return.






45. Aka Harmonic mean.






46. A valuation ratio calculated as price per share divided by book value per share.






47. 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.






48. A forecasting process in which the next period's value as predicted by the forecasting equation is substituted into the right-hand side of the equation to give a predicted value two periods ahead.






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






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






Can you answer 50 questions in 15 minutes?



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