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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 probability based on logical analysis rather than on observation or personal judgment.






2. All changes in equity other than contributions by - and distributions to - own-ers; income under clean surplus accounting; includes all changes in equity during a period except those resulting from investments by own-ers and distributions to owners;






3. The rate of return from a cash-and-carry transaction implied by the futures price relative to the spot price.






4. Aka 'Residual income. '






5. A trader who typically holds posi-tions open overnight.






6. FIrm The cash flow available to the company's suppliers of capital after all operat-ing expenses (including taxes) have been paid and necessary investments in working and fixed capital have been made.






7. Probabilities reflecting beliefs prior to the arrival of new information.






8. An amount or percentage deducted from the value of an owner-ship interest to reflect the relative absence ofmarketability.






9. The risk that govern-mental laws and regulations directly or indirectly affecting a company's operations will change with potentially severe adverse effects on the com-pany's continued profitabiliny and even its long-term sustainability.






10. 1) A contract on an interest rate - whereby at periodic payment dates - the writer of the cap pays the difference between the market interest rate and a specified cap rate if - and only if - this differ-ence is positive. This is equivalent to a strea






11. When disbursements are paid tooquickly or trade credit availability is limited -requiring companies to expend funds beforethey receive funds from sales that could cover theliability.






12. With reference to the presen-tation of expenses in an income statement - the grouping together of expenses serving the same function - e.g. - all items that are costs of good sold.






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






14. Next twelve months P/E: current market price divided by an estimated next twelve months EPS.






15. The portfolio with the each given level of minimum variance for expected return.






16. With reference to equity investors - investors who are focused on paying a relatively low share price in relation to earnings or assets per share.






17. The preference some investors have for shares that exhibit certain characteristics.






18. An ordered listing.






19. A theory of regulatory behavior that holds that regulators must take account of the demands of three groups: legislators - who established and oversee the regulatory agency; firms in the regulated industry; and consumers of the regulated indus-try's






20. The earnings per share that a busi-ness could achieve currently under mid-cyclical conditions.






21. 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.






22. Assets less liabilities; the residual interest in the assets after subtracting the liabilities.






23. A loan in which the borrower receives a sum of money at the start and pays back the entire amount with interest in a single pay-ment at maturity.






24. In the fixed income markets - to price a security on the basis of valuation-relevant char-acteristics (e.g. - debt-rating approach).






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






26. The risk that a company will suffer an extended diminution in market value relative to other companies in the same industry due to a demonstrated lack of concern for environmental - social - and governance risk factors.






27. The process of using an option to buy or sell the underlying.






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






29. With the accounting systems - a formal record of increases and decreases in a specific asset - liability - component of owners' equity - rev-enue - or expense.






30. A yield on a basis comparable to the quoted yield on an interest-bearing money market instrument that pays interest on a 360-<iay basis; the annualized holding period yield - assuming a 360-<iay year.






31. The number of units produced and sold at which the company's net income is zero (revenues = total costs).






32. The nonmonetary return offered by an asset when the asset is in short supply - often associated with assets with seasonal production processes.






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






34. A random variable hav-ing the outcomes 0 and 1.






35. Under U.S. GAAP - a measure used in estimating a defined-benefit pen-sion plan's liabilities - defined as 'the actuarial present value as of a date of all benefits attributed by the pension benefit formula to employee ser-vice rendered prior to that






36. Activities which are associated with the acquisition and disposal of property - plant - and equipment; intangible assets; other long-term assets; and both long-term and short-term investments in the equity and debt (bonds and loans) issued by other c






37. An option strategy involving the purchase of two calls and one put.






38. Temporary differ-ences that result in a red uction of or deduction from taxal:J e income in a future period when the balance sheet item is n~ covered or settled.






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






40. Under U.S. GAAP - a measure used in estimating a defined-benefit pen-sion plan's liabilities - defined as 'the actuarial present value of benefits (whether vested or non-vested) attributed by the pension benefit formula to employee service rendered b






41. The process of valuing long-lived assets at fair value - rather than at cost less accumulated depreciation. Any resulting profit or loss is either reported on the income statement and/or through equity under revaluation surplus.






42. A procedure of selecting every kth member until reaching a sample of the desired size. The sample that results from this procedure should be approximately random.






43. Describes a time series whenits expected value and variance are cons tan t andfinite in all periods and when its covariance withitself for a fixed number of periods in the past orfuture is constant and finite in all periods.






44. The number of units pro-duced and sold at which the company's operating profit is zero (revenues = operating costs).






45. A depreciation method tHat allocates the cost of a long-lived asset based on-actual usage during the period .






46. A variation of a floating-rate note that has some type of unusual characteristic such as a leverage factor or in which the rate moves opposite to interest rates.






47. 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.






48. For data grouped into intervals - the fraction of total observations that are less than the value of the upper limit of a stated interval.






49. 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






50. 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.