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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 method for estimating a company's before-tax cost of debt based upon the yield on comparably rated bonds for maturities that closely match that of the company's existing debt.






2. With reference to a random vari-able - the property of having characteristics such as mean and variance that are not constant through time.






3. The currency in which finan-cial statement amounts are presented.






4. 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.






5. The actual return on a debt security if it is held to maturity.






6. In accounting - a liability of uncertain tim-ing or amount.






7. Describes two time series that have a long-term financial or economic relationship such that they do not diverge from each other without bound in the long run.






8. The hypothesis to be tested.






9. Stan-dard errors of the estimated parameters of a regression that correct for the presence of het-eroskedasticity in the regression's error term.






10. Regression that models the straight-line relationship between the dependent and independen t variable (s) .






11. Ratios that measure a company's ability to meet its long-term obligations.






12. The risk associated with the pos-sibility that a payment due at a later date will not be made.






13. A country's record of international trading - borrowing - and lending.






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






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






16. The portfolio that exploits an arbitrage opportunity.






17. A measure of a bond's price sen-sitivity to interest rate movements. Equal to the Macaulay duration of a bond divided by one plus its yield to maturity.






18. The feature of a futures contract giv-ing the short the right to make decisions about what - when - and where to deliver.






19. The original time to maturity on a swap.






20. Quantiles that divide a distribution into four equal parts.






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






22. Debt or equity financial assets bought with the inten-tion to sell them in the near term - usually less than three months; securities that a company intends to trade.






23. An investment decision rule that accepts projects or investments for which the IRR is greater than the opportunity cost of capital.






24. A qualitative-dependent-variable multi-ple regression model based on the logistic proba-bility distribution.






25. A method of presentation of accounting transactions in which effects on assets appear at the left and effects on liabilities and equity appear at the right of a central dividing line; also known as T-account format.






26. The annual percentage change in real CDP.






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






28. A strategic corporate goal repre-senting the long-term proportion of earnings that the company intends to distribute to shareholders as dividends.






29. Covering or containing all possible outcomes.






30. An option strategy that combines a bull spread and a bear spread having two differentexercise prices - which produces a risk-free payoffof the difference in the exercise prices.






31. The risk that a financial instrument cannot be purchased or sold without a significant concession in price due to the size of the market.






32. The rate of return that suppliers ofcapital require as compensation for their contri-bution of capital.






33. A stage of growth in which a company typically enjoys rapidly expanding markets - high profit margins - and an abnormally high growth rate in earnings per share.






34. The quoted interest rate per period; the stated annual interest rate divided by the number of compounding periods per year.






35. A policy regime is one that selects a target path for the exchange rate with interven-tion in the foreign exchange market to achieve that path.






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






37. The difference between the fixed rate on an interest rate swap and the rate on a Trea-sury note with equivalent maturity; it reflects the general level of credit risk in the market.






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






39. The proportion of a company's assets that is financed with long-term debt.






40. The amount of book value (also called carrying value) of common equity per share of common stock - calculated by dividing the book value of shareholders' equity by the num-ber of shares of common stock outstanding.






41. A forward contract in which the underlying is a foreign currency.






42. A method of valuing prop-erty based on site value plus current construction costs less accrued depreciation.






43. A solvency ratio calculated as total debt divided by total debt plus total share-holders ' equi ty.






44. A record of receipts from exports of goods and services - payments for imp<ilrts of goods and services - net income and net transfers received from the rest of the world.






45. 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.






46. Accounting method in which the only relevant transactions for the financial statements are those that involve cash.






47. A measure of the sensitivity of a bond's yield to a general measure of bond yields in the market that is used to refine the hedge ratio.






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






49. The status of a company in the sense of whether it is assumed to be a going con-cern or not.






50. The evaluation of credit risk; the evaluation of the creditworthiness of a borrower o r counterpar ty.