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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 principle stating that the pr:obability that A or B occurs (both occur) equals he probabili ty thab A occ rs - plus the probabir ty tha~ B occurs - minus the probabil-ity that both A and B occur.






2. An equation describing the expected return on any asset (or portfolio) as a linear function of its beta relative to the market portfolio.






3. The autocorrelation of the error term.






4. An electronic payment system used widely in Europe and Japan.






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






6. The slope coefficients in a multiple regression.






7. PIE The price-to-earnings ratio that is fair - warranted - or justified on the basis of forecasted fundamentals.






8. A sample measure of degree of asymmetry of a distribution.






9. European option An option contract that can only be exercised on its expiration date.






10. Securities held by banks or other financial intermediaries for trading purposes.






11. An activity ratio equal to the number of days in the period divided by inventory turnover over the period.






12. 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






13. The difference between net operating assets at the end and the beginning of the period compared to the average net operating assets over the period.






14. A post-offer takeover defense mechanism that involves the assumption of a large amount of debt that is then used to finance share repurchases; the effect is to dramat-ically change the company's capital structure while attempting to deliver a value t






15. CMT swap A swap in which the floating rate is the rate on a security known as a constant maturity treasury or CMT security.






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






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






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






19. In the context of inventory management - the need for inventory as part of the routine production-sales cycle.






20. With reference to a time series - the underly-ing model generating the times series.






21. An arrangement whereby a customer authorizes a debit to a demand account; typically used by companies to collect routine pay-ments for services.






22. A procedure by which a population is divided into subpopulations (strata) based on one or more classification criteria. Sim-ple random samples are then drawn from each stratum in sizes proportional to the relative size of each stratum in the populati






23. The risk that failures by company man-agers to effectively manage a company's environ-mental - social - and governance risk exposures will lead to lawsuits and other judicial remedies - resulting in potentially catastrophic losses for the company; th






24. A valuation indicator based on past pdce movement.






25. The risk of loss from failures in a company's systems and proce-dures (for example - due to computer failures or human failures) or events completely outside of the control of organizations (which would include 'acts of God' and terrorist actions) .






26. A measurement scale that has all the characteristics of interval measurement scales as well as a true zero point as the origin.






27. A loan that is secured with com-panyassets.






28. The characteristic of minimum-variance frontiers that they are sensitive to small changes in inputs.






29. To sell the assets of a company - division - or subsidiary piecemeal - typically because of bank-ruptcy; the form of bankruptcy that allows for the orderly satisfaction of creditors' claims after which the company ceases to exist.






30. The sum of market value of common equity - book value of preferred equity - and face value of debt.






31. CAPM An adaptation of the CAPM that adds to the CAPM a premium for small size and company-specific risk.






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






33. 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.






34. The granting of stock to employees as a form of compensation.






35. Management's focus on reporting earnings that meet consensus estimates.






36. An inventory account-ing method that identifies which specific inventory items were sold and which remained in inventory to be carried over to later periods.






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






38. The sum of the observations divided by the number of observations.






39. The use of inventory as collat-eral for a loan. Though the lender has claim to some or all of the company's inventory - the com-pany may still sell or use the inventory in the ordi-nary course of business.






40. 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.






41. A subset of a population.






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






43. An option strategy involving the purchase of a Rut and a call wi th the same exercise price. A straddle is based on the expectation of high volatili ty of the underlying.






44. An equation expressing the equiva-lence (parity) of a portfolio of a call and a bondwith a portfolio of a put and the underlying -which leads to the relationship between put andcall prices






45. A possible value of a random variable.






46. Describes a distribution that is more peaked than a normal distribution.






47. A contract that spans a number of accounting periods.






48. With reference to equity investors - investors whose investment disciplines cannot be clearly categorized as value or growth.






49. Method used to estimate the overall capitalization rate by dividing the sale price of a comparable income property into the net operating income.






50. The equal value of differ-ent monies.