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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 standard deviation of active returns.






2. The minimum rate of return required by an investor to invest in an asset - given the asset's riskiness.






3. With reference to regression - the set of variables included in the regression and the regression equation's functional form.






4. Long-term assets with physical sub-stance that are used in company operations - such as land (property) - plant - and equipment.






5. The price received to sell an asset or trans-fer a liability.






6. With reference to cash flow statements - a format for the presenta-tion of the statement which - in the operating cash flow section - begins with net income then shows additions and subtractions to arrive at operatingcash flow.






7. An estimation formula; the formula used to compute the sample mean and other sample statistics are examples of estimators.






8. In a nonconventional cash flow pattern - the initial outflow is not fol-lowed by inflows only - but the cash flows can flip from positive (inflows) to negative (outflows) again (or even change signs several times).






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






10. Activities related to obtaining or repaying capital to be used in the business (e.g. - equity and long-term debt).






11. 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.






12. Under U.S. GAAP - a mea-sure used in estimating a defined-benefit pension plan's liabilities - defined as the 'actuarial present value of vested benefits.'






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






14. 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.






15. A distribution that specifies the probabilities of a random variable's possible outcomes.






16. Aka also enterprise risk management.






17. A taxable loss in the current period that may be used to reduce future taxable income.






18. An extra return that compensates investors for the increased sensitivity of the mar-ket value of debt to a change in market interest rates as maturity is extended.






19. An opportunity to conduct an arbitrage; an opportunity to earn an expected positive net profit without risk and with no net investment of money.






20. Time thought of as advancing in extremely small increments.






21. With reference to a transaction or a security - one that would increase earnings per share (EPS) or result in EPS higher than the com-pany's basic EPS-antidilutive securities are not included in the calculation of diluted EPS.






22. A tabular display of data summarized into a relatively small number of intervals.






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






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






25. A profitability ratio calculated as (net income - preferred divi-dends) divided by average common equity; equal to the return on equity ratio when no preferred equity is outstanding.






26. A poison pill provision that allows for the redemption or cancellation of a poi-son pill provision only by a vote of coNtinuing directors (generally directors who were on the tar-get company's board p rior to the takeover attempt) .






27. The date that employees can first exer-cise stock options; vesting can be immediate or over a future period.






28. The difference between current assets and current liabilities.






29. The present value of an investment's cash inflows (benefits) minus the present value of its cash outflows (costs).






30. With reference to estimators - describes an estimator for which the probability of estimates close to the value of the population parameter increases as sample size increases.






31. The probabili ty that a confi-dence interval ind udes the unknown population parameter.






32. The most common type of commun-size analysis - ill which the accounts in a given period are compared to a benchmark item in that same year.






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






34. Investing on the basis of dif-ferential expectations.






35. The income tax expected to be recovered - from the taxing authority - on the basis of taxable income. It is a recovery of previ-ously remitted taxes or future taxes owed by the company.






36. Netting the market values of all contracts - not just derivatives - between parties.






37. The ratio of gross profi t to revenues.






38. The estimated cost of equity capital in money terms.






39. 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.






40. Interest earned but not yet paid.






41. A complete pass through the steps of a simula tion .






42. Cannibalization occurs when an investment takes customers and sales away from another part of the company.






43. A public document that provides the material facts concerning matters on which shareholders will vote.






44. Fixed-income secuntles in which the holder of the security has the right to withhold payment of the full amount due at matu-ri ty if a credi t even t occurs.






45. Costs borne by owners to moni tor the management of the company (e.g. - board of director expenses).






46. The company in a merger or acquisition that is being acquired.






47. An operating segment or one level below an operating segment (referred to as a component) .






48. A conventional cash flow pattern is one with an ini tial outflow followed by a series of in ows.






49. An agreement between two governments in which the government of the exporting country agrees to restrain the volume of its own exports.






50. Shares that were issued and subse-quently repurchased by the company.







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