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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 purchase of some portion of one company by another; the purchase may be for assets - a definable segment of another entity - orthe purchase of an entire company.






2. The ability to make additional investments in a project at some future time if the financial results are strong.






3. The problem or issue of popu-lation regression parameters that have changed over time.






4. Independent projects are projects whose cash flows are independent ofeach other.






5. Desired investment outcomes; includes risk objectives and return objectives.






6. A method for accounting for the effect of options (and warrants) on earnings per share (EPS) that specifies what EPS would have been if the options and warrants had been exercised and the company had used the pro-ceeds to repurchase common stock.






7. Debt or equity financial assets bought with the inten-tion to sell them in the near term - usually less than three months; securities that a company intends to trade.






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






9. A procedure used primarily in futures markets in which the parties to a contract settle the amount owed daily. Also known as the daily settlement.






10. A trader who typically holds posi-tions open overnight.






11. Under U.S. GAAP -a special purpose entity structured to avoid consol-idation that must meet qualification criteria.






12. The date that a shareholderlisted on the corporation's books will be deemedto have ownership of the shares for purposes ofreceiving an upcoming dividend; two businessdays after the ex-dividend date.






13. A variation of a forward contract that has essentially the same basic definition but with some additional features - such as a clearing-house guarantee against credit losses - a daily settlement of gains and losses - and an organized electronic or fl






14. A multifactor model In which statistical methods are applied to a set of historical returns to determine portfolios that best explain either historical return covariances or vanances.






15. Resources controlled by an enterprise as a result of past events and from which future eco-nomic benefits to the enterprise are expected to flow.






16. The dollar amount of cash divi-dends paid during a period per share of common stock.






17. Quantiles that divide a distribution into 100 equal parts.






18. The probabili ty that a confi-dence interval ind udes the unknown population parameter.






19. The square root of the average squared forecast error; used to compare the out-of-sample forecasting perfor-mance of forecasting models.






20. An increment or premium to value associated with a controlling ownership interest in a company.






21. A financial covenant made in conjunction with existing debt that restricts a company's ability to incur additional debt at the same seniority based on one or more financial tests or conditions.






22. Heteroskedasticity of the error term that is not correlated with the values of the independent variable(s) in the regression.






23. Income approach that values an asset based on estimates of future cash flows discounted to present value by using a discount rate reflective of the risks associated wi th the cash flows.






24. A fUl !lction giving the probability of joint occurrences of values of stated random variables.






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






26. The number of successes in n Bernoulli trials for which the probability of success is constan t for all trials and the trials are independent.






27. An option contract that can be exercised at any time until its expiration date.






28. 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.






29. 1) A contract on an interest rate - whereby at periodic payment dates - the writer of the cap pays the difference between the market interest rate and a specified cap rate if - and only if - this differ-ence is positive. This is equivalent to a strea






30. A profitability ratio calculated as (net income - preferred divi-dends) divided by average common equity; equal to the return on equity ratio when no preferred equity is outstanding.






31. The actual amount paid for income taxes in the period; not a provision - but the actual cash outflow.






32. An entity associated with a futures market that act~ as middleman between the con-tracting parties and guarantees to each party the performance of the other.






33. 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.






34. A dollar deposited outside the United States.






35. An approach to investing that typically begins with macroeconomic forecasts.






36. Observations through time on a single characteristic of multiple observational units.






37. An increase in a company's earnings that results as a consequence of the idio-syncrasies of a merger transaction itself rather than because of resulting economic benefits ofthe combination.






38. Agreements between the company as borrower and its creditors.






39. A rule explaining the expected value of a random vari-able in terms of expected values of the random variable conditional on mutually exclusive and exhaustive scenarios.






40. Financial statements in which all elements (accounts) are stated as a per-centage of a key figure such as revenue for an income statement or total assets for a balance sheet.






41. 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.






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






43. Division ofnet operating income by an overall capitalization rate to arrive at market value.






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






45. Method of valu-ing property based on recen t sales prices of simi-lar properties.






46. A portfolio having factor sensitiv-ities that are matched to those of a benchmark or other portfolio.






47. With respect to financial statement analy-sis - the ability of a company to fulfill its long-term obligations.






48. Options that - if exercised - would result in the value received being worth more than the payment required to exercise.






49. The yield to maturity on a basis that ignores compounding.






50. An approach for estimating a country's equity risk premium. The market rate of return is estimated as the sum of the dividend yield and the growth rate in dividends for a market index. Subtracting the risk-free rate of return from the estimated marke







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