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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. With respect to the format of a bal-ance sheet - a format in which assets - liabilities - and equity are listed in a single column.






2. The owners' remaining claim on the company's assets after the liabilities are deducted.






3. Options that - if exercised - would result in the value received being worth more than the payment required to exercise.






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






5. Cash-settled for-ward contracts - used predominately with respect to foreign exchange forwards.






6. With reference to the cash flow statement - a format for the presentation of the statement in which cash flow from operat-ing activities is shown as operating cash receipts less operating cash disburseme ts.






7. A forward contract in which the underlying is a bond.






8. R The correlation between the actual and forecasted values of the dependent variable in a regression.






9. P/E calculated on the basis of a forecast of EPS; a stock's current price divided by next year's expected earnings.






10. A reduction in proportional ownership inter-est as a result of the issuance of new shares.






11. The rate at which periodic interest payments are calculated.






12. 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






13. Individual accounts to which an employee and typically the employer makes contributions - generally on a tax-advantaged basis. The amounts of contributions are defined at the outset - but the future value of the benefit is unknown. The employee bears






14. Options that relate to investment deci-sions such as the option to time the start of a proj-ect - the option to adjust its scale - or the option to abandon a project that has begun.






15. The probability of an event estimated as a relative frequency of occurrence.






16. The costs of holding an asset - generally a function of the physical char-acteristics of the underlying asset.






17. A condition in the futures markets in which a transaction cannot take place because the price would be beyond the limits.






18. When settling a contract - the risk that one party could be in the process of paying the counterparty while the counterparty is declar-ing bankruptcy.






19. When liabilities translated at the current exchange rate are greater than assets translated at the current exchange rate. Liabilities exposed to translation gains or losses exceed the exposed assets.






20. Method of valu-ing property based on recen t sales prices of simi-lar properties.






21. A model for pricing options in which the underlying price can move to only one of two possible new prices.






22. A finan-cial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its oper-ations; equal to days of inventory on hand + days of sales outstanding - number of days of






23. An activity ratio equal to rev-enue divided by average receivables.






24. A decision rule for choos-ing between two investments based on their means and variances.






25. The restatement of financial statement items using a common denominator or reference item that allows one to identify trends and major differences; an example is an income statement in which all items are expressed as a percent of revenue.






26. Temporary differ-ences that result in a taxable amount in a future period when determining the taxable profit as the balance sheet item is recovered or settled. t-Distribution A symmetrical distribution defined by a single parameter - degrees of free






27. The remaining (undepreciated) bal-ance of an asset's purchase cost. For liabilities - the face value of a bond minus any unamortized dis-count - or plus any unamortized premium.






28. The risk of loss caused by a counterparty's or debtor's failure to make a promised payment.






29. The number of shares that would beoutstanding if all potentially dilutive claims oncommon shares (e.g. - convertible debt - convert-ible preferred stock - and employee stock options)were exercised.






30. 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






31. 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






32. With reference to investmentselection processes - an approach that involves selection from all securities within a specified investment universe - i.e. - without prior narrowiNg of the universe on the bas' s of macroeconomj c or overall market consid






33. Company growth in output or sales that is achieved by buying the necessary resources externally (i.e. - achieved through mergers and acquisitions) .






34. Sales on a bill-and-hold basis involve selling products but not delivering those products until a later date.






35. The return on a portfolio minus the return on the portfolio's benchmark.






36. Describes a distribution with kurtosis identical to that of the normal distribution.






37. The price multiple for a stock assumed to hold at a stated future time.






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






39. 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.






40. The mix of a company's variable costsand fixed costs.






41. Approach to trans-lating foreign currency financial statements for consolidation in which monetary assets and liabil-ities are translated at the current exchange rate. Nonmonetary assets and liabilities are translated at historical exchange rates (th






42. Costs that fluctuate with the level of production and sales.






43. The unlevered beta; reflects the business risk of the assets; the asset's systematic risk.






44. 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






45. 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.






46. A rule explaining the uncon-ditional probability of an event in terms of proba-bilities of the event conditional on mutually exclusive and exhaustive scenarios.






47. In accounting contexts - cash on hand (e.g. - petty cash and cash not yet deposited to the bank) and demand deposits held in banks and similar accounts that can be used in payment of obligations.






48. A model that specifies an asset's value relative to the value of another asset.






49. The prooability of an observation - given a par ticular set of conditions.






50. A theory pertaining to a company's optimal capital struc-ture; the optimal level of debt is found at the point where additional debt would cause the costs of financial distress to increase by a greater amount than the benefit of the additional tax sh