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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 ratio of P I E-ta-growt - calculated as the stock's P /.E divided by the expected earnings growth rate in percent.






2. Serial correlation in which a positive e rror for one observation increases the chance of a negative error for another observation - and vice versa.






3. A function with non-negative values such that probability can be described by areas under the curve graphing the function.






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






5. Revenue that has been earned but not yet billed to customers as of the end of an accounting period.






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






7. An act passed by the U.S. Con-gress in 2002 that created the Public Company Accounting Oversight Board (PCAOB) to oversee auditors.






8. A dividend payout pol-icy under which earnings in excess of the funds necessary to finance the equity portion of com-pany's capital budget are paid out in dividends.






9. 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






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






11. A model that specifies an asset's intrinsic value.






12. A method of estimating VAR that uses data from the returns of the portfolio over a recent past period and compiles this data in the form of a histogram.






13. The income tax expected to be recovered - from the taxing authority - on the basis of taxable income. It is a recovery of previ-ously remitted taxes or future taxes owed by the company.






14. The slope coefficients in a multiple regression.






15. A form ofcommon-size analysis in which the accounts in agiven period are used as the benchmark or baseperiod - and every account is restated in subse-quent periods as a percentage of the base period'ssame account.






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






17. A swap in which the underlying is a commodity such as oil - gold - or an agricultural product.






18. PIE (or forward PIE or prospective PIE) A stock's current price divided by the next year's expected earnings.






19. A depreciation method tHat allocates the cost of a long-lived asset based on-actual usage during the period .






20. A swap in which the floating payments have a lower limit.






21. A legal contract specifYing the terms of a bond issue.






22. Method of managing inventory that minimizes in-process inventory stocks. kth order autocorrelation The correlation between observations in a time series separated by k periods.






23. Public-company com-parables for the company being valued.






24. The mix of debt and equity that a company uses to finance its business; a company's specific mixture of long-term financing.






25. The risk associated with accounting standards that vary from country to country or with any uncertainty about how certain transac-tions should be recorded.






26. Generally - a synonym for revenue; 'sales' is generally understood to refer to the sale of goods - whereas 'revenue' is understood to include the sale of goods or services.






27. The fair value of the estimated costs to be incurred at the end of a tangible asset's service life. The fair value of the liability is determined on the basis of discounted cash flows.






28. 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






29. The hypothesis to be tested.






30. R The correlation between the actual and forecasted values of the dependent variable in a regression.






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






32. The period benefited~y the employee's service - usually th e period between the grant date and the vesting date.






33. To reduce the value of a future payment in allowance for how far away it is in time; to calcu-late the present value of some future amount. Also - the amount by which an instrument is priced below its face value.






34. The process of obtaining a sample.






35. A purchase involving a buyer that would benefit from certain synergies associ-ated with owning the target firm.






36. An option strategy in which a position in an asset is converted to a risk-free position with a position in a specific number of options. The number of options per unit of the underlying changes through time - and the position must be revised to maint






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






38. With respect to the format of a bal-ance sheet - a format in which assets - liabilities - and equity are listed in a single column.






39. The expected value (the probability-weighted average) of squared deviations from a random variable's expected value.






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






41. A post-offer takeover defense mechanism that involves the assumption of a large amount of debt that is then used to finance share repurchases; the effect is to dramat-ically change the company's capital structure while attempting to deliver a value t






42. The granting of stock options to employees as a form of compensation.






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






44. An amount or percent-age deducted from the pro rata share of 100 per-cent of the value of an equity interest in a business to reflect the absence of some or all of the powers of control.






45. The use of inven-tory as collateral for a loan; similar to a trust receipt arrangement except there is a third party (i.e. - a warehouse company) that supervises the inventory.






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






47. The discount possibly applied by the market to the stock of a company operating in multiple - unrelated businesses.






48. Residual income after the forecast horizon.






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






50. The graph of the capital asset pricing model.