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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 sum of all values in a distribution or dataset - divided by the number of values summed; a synonym of arithmetic mean.






2. Huidity When receipts lag - creating pres-sure fmm the decreased available funds.






3. The ratio of the market value of debt and equity to the replacement cost of total assets.

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






5. Not due to be consumed - converted into cash - or settled within one year after the bal-ance sheet date.






6. With respect to double-entry accounting - a credit records increases in liability - owners' equity - and revenue accounts or decreases in asset accounts; with respect to borrowing - the willing-ness and ability of the borrower to make promised paymen






7. A set of observations on a variable's out-comes in different time periods.






8. A money measure of the mini-mum value of losses expected during a specified time period at a given level of probability.






9. An intangible that cannot be acquired singly and that typically possesses an indefinite benefit period; an example is account-ing goodwill.






10. A wholly-owned sub-sidiary of a company that is established to provide financing of the sales of the parent company.






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






12. A market index portfolio.






13. A probability distri-bution for a group of random variables that is completely defined by the means and variances of the variables plus all the correlations between pairs of the variables.






14. Said of a por tfolio for which eco-nomic sectors are represented in the same pro-portions as in the benchmark - using market-value weights.






15. Net earnings avail-able to common shareholders (i.e. - net income minus preferred dividends) divided by the weighted average number of common shares out-standing during the period.






16. An acquisition in which the acquirer purchases the target company's assets and pay-ment is made directly to the target company.






17. 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.






18. Rate of return that dis-counts future cash flows from an investment to the exact amount of the investment; the discount rate that makes the present value of an invest-ment's costs (outflows) equal to the present value of the investment's benefits (in






19. A measure of sensitivity; the incremental change in one variable with respect to an incre-mental change in another variable.






20. American Free Trade Agreement An agree-ment - which became effective on January 1 - 1994 - to eliminate all barriers to international trade between the United States - Canada - and Mexico after a 15-year phasing-in period.






21. The portion of an entity's income that is subject to income taxes under the tax laws of its jurisdiction.






22. The official price - designated by the clearinghouse - from which daily gains and losses will be determined and marked to market.






23. A transaction between two affiliates - an investor company and an associate company such that the investor company records a profit on its income statement. An example is a sale of inven-tory by the investor company to the associate.






24. 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.






25. The amount the company estimates that it can sell the asset for at the end of its useful life.






26. The period benefited~y the employee's service - usually th e period between the grant date and the vesting date.






27. A money measure of the goods and services produced within a country's borders over a stated time period.






28. The amount of money a buyer pays and seller receives to engage in an option transaction.






29. A test in which the null hypothesis is rejected only if the evidence indicates that the population parameter is greater than (smaller than) eo- The alternative hypothesis also has one side.






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






31. A method of revenue recogni-tion in which the company does not recognize any revenue until the contract is completed; used par-ticularly in long-term construction contracts.






32. Debt with the added feature that the bondholder has the option to exchange the debt for equity at prespecified terms.






33. The property of having a constantvariance; refers to an error term that is constantacross observations.






34. Mean active return divided by active risk; or alpha divided by the standarddeviation of diversifiable risk.






35. The ratio ofthe percentage change in operating income to the percentage change in units sold; the sensitivity of operating income to changes in units sold.






36. Instruments that payinterest as the difference between the amountborrowed and the amount paid back.






37. A merger involving the pur-chase of a target ahead of the acquirer in the value or production chain; for example - to acquire a supplier.






38. An average in which each observation is weighted by an index of its relative importance.






39. An international organi-zation that places greater obligations on its mem-ber countries to observe the GATT rules.






40. An intangible asset that represents the excess of the purchase price of an acquired com-pany over the value of the net assets acquired.






41. A long-term pattern of movement in a partic-ular direction.






42. The strongest form of short-term bank borrowing facilities; they are in effect for multiple years (e.g. - 3-5 years) and may have optional medium-term loan features.






43. The accuracy with which a company's reported financials reflect its operat-ing performance and their usefulness for forecast-ing future cash flows.






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






45. An active investment strategy that includes intentional matching of the timing of cash outflows with investment maturities.






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






47. A purchase involving a buyer that would benefit from certain synergies associ-ated with owning the target firm.






48. Income approach that estimates the value of all intangible assets of the business by capitalizing future earnings in excess of the estimated return requirements associated with working capital and fixed assets.






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






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