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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 reference to estimators - describes an estimator for which the probability of estimates close to the value of the population parameter increases as sample size increases.






2. The return on an asset in excess of the asset's required rate of return; the risk-adjusted return.






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






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






5. The estimated gross amount of money that could be realized from the liquidation sale of an asset or assets - given a rea-sonable amount of time to find a purchaser or purchasers.






6. The loss in the value of an option resulting from movement of the option price toward its payoff value as the expiration day approaches.






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






8. An inter-national agreement signed in 1947 to reduce tar-iffs on international trade.






9. With respect to inventory accounting - the planned or target unit cost of inventory items or services.






10. The ratio of a set of observations' standard deviation to the observa-tions' mean value.






11. The condition in a financial mar-ket in which two equivalent financial instruments or combinations of financial instruments can sell for only one price. Equivalent to the principle that no arbitrage opportunities are possible.






12. 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.






13. The combination of puts - the underly-ing - and risk-free bonds that replicates a call option.






14. A transaction in exchange-listed deriva-tive markets in which a party re-enters the market to close out a position.






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






16. 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.






17. A measure of correlation applied to ranked data.






18. A trade in two closely related stocks that involves buying the relatively undervalued stock and selling short the relatively overvalued stock.






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






20. A model for pncmg futurescontracts in which the futures price is determinedby adding the cost of carry to the spot price.






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






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






23. An estimation formula; the formula used to compute the sample mean and other sample statistics are examples of estimators.






24. The portfolio that exploits an arbitrage opportunity.






25. 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.






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






27. The rate demanded by purchasers of bonds - given the risks associated with future cash payment obligations of the particular bond issue.






28. With reference to investment selection processes - an approach that starts with macro selection (i.e. - identifying attractive geo-graphic segments andVor industry segments) and then addresses selection 0 the most attractive investments within those






29. The value derived using a sum-of-the-parts valuation.






30. Aka Harmonic mean.






31. The contribution to active risk squared resulting from the portfolio's different-than-benchmark exposures relative to factors specified in the risk model.






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






33. 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.






34. 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.






35. Valuation approach that values an asset based on pricing multiples from sales of assets viewed as similar to the subject asset.






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






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






38. A theory of economic growth that proposes that real CDP per person grows because technological change induces a level of saving and investment that makes capital per hour oflabor grow.






39. A result indicating that the null hypothesis can be rejected; with reference to an estimated regression coefficient - frequently understood to mean a result indicating that the corresponding population regression coefficient is different from O.






40. A merger involving companies inthe same line of business - usually as competitors.






41. A value at or below which a stated fraction of the data lies.






42. The ability to react and adapt to financial adversities and opportunities.






43. Plan in which the company promises to pay a certain annual amount (defined benefit) to the employee after retirement. The company bears the investment risk of the plan assets .






44. The difference between current assets and current liabilities.






45. An experiment that can produce one of two outcomes.






46. The business of acting as agents for buy-ers or sellers - usually in return for commissions.






47. Controlling additional property throughreinvestment - refinancing - and exchanging.






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






49. Sales minus the cost of sales ~.e . - the cost of goods sold for a manufactur-ing cOlp pany) .






50. An approach to decomposing return on investment - e.g. - return on equity - as the product of other financial ratios.