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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. A theory of economic growth based on the view that the growth of real GDP per person is temporary and that when it rises above subsistence level - a population explo-sion eventually brings it back to subsistence level.






2. Each component call option in a cap.






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






4. A trade in two closely related stocks involving the short sale of one and the pur-chase of the other.






5. A variable used to explain the dependen t variable in a regression ; a right-hand-side variable in a regression equation .






6. With reference to regression - the set of variables included in the regression and the regression equation's functional form.






7. A two-dimensional plot of pairs of obser-vations on two data series.






8. Next twelve months P/E: current market price divided by an estimated next twelve months EPS.






9. The pursuit of wealth by capturing economic rent---consumer surplus - producer sur-plus - or economic profit.






10. Securities held by banks or other financial intermediaries for trading purposes.






11. Factors related to the company's internal performance - such as factors relating to earnings growth - earnings variability - earnings momentum - and financial leverage.






12. A balance sheet organized so as to group together the various assets and liabilities into subcategories (e.g. - current and noncurrent) .






13. A range that has a given proba-bility that it will contain the population parameter it is intended to estimate.






14. 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.






15. With reference to the presen-tation of expenses in an income statement - the grouping together of expenses serving the same function - e.g. - all items that are costs of good sold.






16. The risk of a change in value of a n asset or liability denomi-nated in a foreign currency due to a change in exchange rates.






17. 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.






18. 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.






19. Momentum indicators based on price.






20. The competitive strategy of offeringunique products or services along some dimen-sions that are widely valued by buyers so that thefirm can command premium prices.






21. The day that options are granted to employees; usually the date that compensation expense is measured if both the number of shares and option price are known.






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






23. The rate at which an option's time value decays.






24. Aka also enterprise risk management.






25. The status of a company in the sense of whether it is assumed to be a going con-cern or not.






26. The relationship of the quantity of an asset being hedged to the quantity of the deriva-tive used for hedging.






27. An acquisition in which the acquirer purchases the target company's assets and pay-ment is made directly to the target company.






28. Under U.S. GAAP - a mea-sure used in estimating a defined-benefit pension plan's liabilities - defined as the 'actuarial present value of vested benefits.'






29. Unexpected earnings divided by the standard deviation of analysts' earnings forecasts.






30. A pre-offer takeover defense mecha-nism that gives target company bondholders the right to sell their bonds back to the target at a pre-specified redemption price - typically at or above par value; this defense increases the need for cash and raises






31. Any outcome or specified set of outcomes of a random variable.






32. Investigation and analysis in support of a recommendation; the failure to exercise due diligence may sometimes result in liability accord-ing to various securities laws.






33. An inventory accounting method in which the sales value of an item is reduced by the gross margin to calculate the item's cost.






34. An Activity ratio calculated as total revenue divided by average net fixed assets.






35. A legal corporate entity whose shareholders are its members. The members of the exchange have the privilege of executing transactions directly on the exchange.






36. A multifactor model in which the factors are attributes of stocks or com-panies that are important in explaining cross-sectional differences in stock prices.






37. The average squared deviation below a target value.






38. Probabilities that generally do not vary from person to person; includes a pri-ori and objective probabilities.






39. A type of non-audited financial statements; typically provide an opinion letter with representations and assurances by the reviewing accountant that are less than those in audited financial statements.






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






41. The required rate of return on com-mon stock.






42. The process of using an option to buy or sell the underlying.






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






44. A trader holding a position open some-what longer than a scalper but closing all posi-tions at the end of the day.






45. A series of call options on an interest rate - with each option expiring at the date on which the floating loan rate will be reset - and with each option having the same exercise rate. A cap in general can have an underlying other than an interest ra






46. An approach to investment analysis and security selection.






47. An industry's underlying eco-nomic and technical characteristics.






48. The process of obtaining a sample.






49. Also called present value of a basis point or price value of a basis point (PVBP) - the change in the bond price for a I basis point change in yield.






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