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CFA Level2 Vocab

Subjects : certifications, cfa
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. For data grouped into intervals - the fraction of total observations that are less than the value of the upper limit of a stated interval.






2. Factor models that combine features of more than one type of factor model.






3. 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






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






5. 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






6. A portfolio offering the highest expected return for a given level of risk as mea-sured by variance or standard deviation of return.






7. Assets that are expected to be consumed or converted into cash in the near future - typically one year or less.






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






9. An option strategy involving the purchase of one option and sale of another option that is identical to the first in all respects except either exercise price or expiration.






10. With reference to statisti. cal inference - the subdivision dealing with estimating the value of a population parameter.






11. A means of settling payments in which the amount owed by the first party to the second is netted with the amount owed by the sec-ond party to the first; only the net difference is paid.






12. A measure of central tendency computed by taking the nth root of the product of n non-negative values.






13. A variation of VAR that reflects the risk of a company's earnings instead of its market value.






14. The use of inventory as collateral for a loan. The inventory is segregated and held in trust - and the proceeds of any sale must be remitted to the lender immediately. t-Test A hypothesis test using a statistic (I-statistic) that follows a t-<listrib






15. Residual income after the forecast horizon.






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






17. 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.






18. The positive square root of the sample variance.






19. In the context of the Treynor-Black model - the portfolio formed by mixing analyzed stocks of perceived nonzero alpha values. This portfolio is ultimately mixed with the passive mar-ket index portfolio.






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






21. A sample measure of the degree of dispersion of a distribution - calculated by dividing the sum of the squared deviations from the sam-ple mean by the sample size minus 1.






22. Options on individual stocks; also known as stock options.






23. A listing in which tile order of tile listed items does not matter.






24. 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.






25. In using the method of com parables - the value of a price mul-tiple for the comparison asset; when we have com-parison assets (a group) - the mean or median value of the multiple for the group of assets.






26. The intercept and slope coefficient(s) of a regression.






27. The purchase of the accumulated shares of a hostile investor by a company that is targeted for takeover by that investor - usually at a substan-tial premium over market price.






28. An option in which the underly-ing is an interest rate.






29. When parties agree to exchange only the net amount owed from one party to the other.






30. A form of restructuring in which sharehold-ers of a parent company receive a proportional number of shares in a new - separate entity; share-holders end up owning stock in two different companies where there used to be one.






31. The number of indepen-dent observations used.






32. 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.






33. In a nonconventional cash flow pattern - the initial outflow is not fol-lowed by inflows only - but the cash flows can flip from positive (inflows) to negative (outflows) again (or even change signs several times).






34. Aka 'Market efficiency. '






35. Estimate of the aver-age number of days it takes to collect on credit accounts.






36. A measurement scale that not only ranks data but also gives assurance that the differ-ences between scale values are equal.






37. Company growth in output or sales that is achieved by making investments internally (i.e. - excludes growth achieved through mergers and acquisitions).






38. An option in which the underlying value equals the exercise price.






39. A country that is lending more to the rest of the world than it is borrowing from it.






40. The uncertainty associated with tax laws.






41. The date on which the parties to a swap make payments.






42. A feature of futures markets in which futures prices provide valuable information about the price of the underlying asset.






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






44. 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.






45. The standard deviation of active returns.






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






47. Futures contracts in which the underlying is a stock - bond - or currency.






48. With reference to grouped data - the most frequently occurring interval.






49. Projects in which influential managers want the corporation to invest. Often - unfortu-nately - pet projects are selected without undergo-ing normal capital budgeting analysis.






50. The proportion of a company's assets that is financed with long-term debt.







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