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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. An activity ratio calculated as cost of goods sold divided by average inventory.






2. The accounting principle that expenses should be recognized when the associ-ated revenue is recognized.






3. A general strategy usually thought of as reducing - if not eliminating - risk.






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






5. Degree of peakedness (fatness of tails) in excess of the peakedness of the normal distribution.






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






7. The probability-weighted average of the possible outcomes ofa random variable.






8. A present value model of stock value that views the intrinsic value of a stock as present value of the stock's expected future dividends.






9. With reference to regression errors - errors that are correlated across observations.






10. Probabilities reflecting beliefs prior to the arrival of new information.






11. A result in probability theory stating that inconsistent probabilities create profit opportunities.






12. The risk that environmental - social - or governance risk fac tors will result in significant costs or other losses to a company and its share-holders; the risk arising from a company's obliga-tion to meet required payments under its financ-ing agree






13. The single-period interest rate for a completely risk-free security if no infla-tion were expected.






14. The probability of an event not conditioned on another event.






15. The preference some investors have for shares that exhibit certain characteristics.






16. PIE PI Es based on normalized EPS data.






17. Provision for a return of invest-ment - net of value appreciation.






18. Ratios that measure a company's ability to generate profitable sales from its resources (assets).






19. A perpetual annuity - or a set of never-ending level sequential cash flows - with the first cash flow occurring one period from now.






20. An inventory account-ing method that identifies which specific inventory items were sold and which remained in inventory to be carried over to later periods.






21. A graph of a frequency distri-bution obtained by drawing straight lines join-ing successive points representing the class frequencies.






22. A pre-offer takeover defense mech-anism involving the corporate charter (e.g. - stag-gered boards of directors and supermajority provisions) .






23. With respect to revenue recognition - a method that s ecifies that the portion of the total profit of the sale that . s recognized in each pe riod is deter-mined by the percentage of the total sales price for which the seller has received cash.






24. A widely used approach to estimate an overall capitalization rate. It is based on the premise that debt and equity financ-ing is typically involved in a real estate transaction.






25. Estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.






26. A value against which a computed test statistic is compared to decide whether to reject or not reject the null hypothesis.






27. The amount of money that a trader deposits in a margin account. The term is derived from the stock market practice in which an investor bor-rows a portion of the money required to purchase a certain amount of stock. In futures markets - there is no b






28. A measurement scale that has all the characteristics of interval measurement scales as well as a true zero point as the origin.






29. The internal rate of return on a portfol io - taking account of all cash flows.






30. Orders to buy or sell that are too large for the liquidity ordinarily available in dealer networks or stock exchanges.






31. A procedure for determining the interest on a loan or bond in which the interest is deducted from the face value in advance.






32. 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.






33. 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.






34. Costs of research and development in progress atan acquired company; often - part of the purchaseprice of an acquired company is allocated to suchcosts.






35. The smallest level of significance at whichthe null hypothesis can be rejected; also called themarginal significance level.






36. Serial correlation in which a positive error for one observation increases the chance of a positive error for another observation - and a negative error for one observation increases the chance of a negative error for another observation.






37. An extra return that compen-sates investors for the risk of loss relative to an investment's fair value if the investment needs to be converted to cash quickly.






38. For accounting purposes - the spot exchange rate on the balance sheet date.






39. A principle stating that the pr:obability that A or B occurs (both occur) equals he probabili ty thab A occ rs - plus the probabir ty tha~ B occurs - minus the probabil-ity that both A and B occur.






40. FIrm model A model of stock valuation that views the value of a firm as the pres-ent value of expected future free cash flows to the firm.






41. 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.






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






43. An annuity with a first cash flow that is paid one period from the present.






44. A situation in a futures market where the current futures price is greater than the current spot price for the underlying asset.






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






46. Dummy variables used as dependent variables rather than as inde-pendent variables.






47. The variance of one variable - given the outcome of another.






48. The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or groups of assets.






49. A time series that is not covariance station-ary is said to have a unit root.






50. 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