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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. In probability - with reference to an event 5 - the event that 5 does not occur; in eco-nomics - a good that is used in conjunction with another good.






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






3. The ratio of the percentage change in net income to the percentage change in units sold; the sensitivity of the cash flows to owners to changes in the number of units pro-duced and sold.






4. The sensitivity of the option price to the risk-free rate.






5. A transaction in which a company buys back its own shares. Unlike stock dividends and stock splits - share repurchases use corporate cash.






6. The unsold units of product on hand.






7. The risk associated with changes in the relative attractiveness of products and services offered for sale - arising out of the competitive effects of changes in exchange rates.






8. A tool that calculates the contri-bution to real CDP growth of each of its sources.






9. The number of observations in a given interval (for grouped data) .






10. A business's value under a going-concern assumption.






11. With respect to double-entry accounting - a debit records increases of asset and expense accounts or decreases in liability and owners' equity accounts.






12. The amount at which an asset or liability is valued according to account-ing principles.






13. The positive square root of semivari-ance (sometimes called semistandard deviation) .






14. The price paid to buy an asset.






15. In the context ofmerger analysis - it is an estimate of a target com-pany's value found by discounting the company's expected future free cash flows to the present.






16. The value of an asset given a hypothetically complete understand-ing of the asset's investment characteristics; the value obtained if an option is exercised based on current conditions.






17. The amount for which one can sell some-thing - or the amount one must pay to acquire something.






18. The error of not rejecting a false null hypothesis.






19. A quantity - calculated based on a sam-ple - whose value is the basis for deciding whether or not to reject the null hypothesis.






20. In reference to mergers - it is the savings achieved through the consolidation of operations and elimination of duplicate resources.






21. A taxable loss in the current period that may be used to reduce future taxable income.






22. A bank commitment to extend credit up to a pre-specified amount; the commitment is considered a short-term liability and is usually in effect for 364 days (one day short of a full year).






23. 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.






24. A swap in which the floating rate is the cumulative value of a single unit of currency invested at an overnight rate dur-ing the settlement period.






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






26. Arrangements that do not result in additional liabilities on the balance sheet but nonetheless create economic obligations.






27. The argument that it is necessary to protect a new industry to enable it to grow into a mature industry that can compete in world markets.






28. 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.






29. The practice of determining a model by extensive searching through a dataset for statisti-cally significant patterns.






30. An option that allows the holder to buy (if a call) or sell (if a put) an underlying cur-rency at a fixed exercise rate - expressed as an exchange rate.






31. The minimum real wage rate needed to maintain life.






32. Aka 'Market efficiency.






33. Assets that can be most readily con-verted to cash (e.g. - cash - short-term marketable investments - receivables) .






34. Risk for which investors demand com-pensation for bearing (e.g. - equity risk - company-specific factors - macroeconomic factors).






35. Said of a sale in which proceeds are to be paid in installments over an extended period of time.






36. To defer the decision to invest in a future projecn until the outcome of some or all of a current project is known. -Projects are sequenced through time - so that investing iN a project creates the option to invest in future projects.






37. A result in statistics that states that the sample mean computed from large sam-ples of size n from a population with finite vari-ance will follow an approximate normal distribution with a mean equal to the population mean and a variance equal to the






38. A solvency ratio calculated as EBIT divided by interest payments.






39. When assets trans-lated at the current exchange rate are greater in amount than liabilities translated at the current exchange rate. Assets exposed to translation gains or losses exceed the exposed liabilities.






40. A bar chart of data that have been grouped into a frequency distribution.






41. A quoted interest rate that does not account for compounding within the year.






42. An approach to valuation that involves using a price multiple to evaluate whether an asset is relatively fairly valued - rela-tively undervalued - or relatively overvalued when compared to a benchmark value of the multiple.






43. The goods and services that we sell to peo-ple in other countries.






44. A combination of interest rate put options designed to hedge a lender against lower rates on a floating-rate loan.






45. The periodic investment of a fixed amount of money.






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






47. Financial ratios involving bal-ance sheet items only.






48. The extent to which a company's operations are predictable with substantial confidence.






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






50. Long-term assets with physical sub-stance that are used in company operations - such as land (property) - plant - and equipment.