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






2. An offset to accounts receivable for the amount of accounts receivable that are estimated to be uncollectible.






3. Correlation between adj acent observations in a time ser ies.






4. A type of weighted mean computed by averaging the reciprocals of the ohservations - then taking the reciprocal of that average.






5. The process of selecting - evaluat-ing - and interpreting financial data in order to formulate an assessment of a company's present and future financial condition and performance.






6. 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.






7. A form of restructuring in which sharehold-ers of a parent company receive a proportional number of shares in a new - separate entity; share-holders end up owning stock in two different companies where there used to be one.






8. A standardized measure of systematic risk based upon an asset's covariance with the market portfolio.






9. The use of accounts receivable as collateral for a loan.






10. A country that is lending more to the rest of the world than it is borrowing from it.






11. The capital structure at which the value of the company is maximized.






12. Future benefits promised to the employee regardless of continuing service. Bene-fits typically vest after a specified period of service or a specified period of service combined with age.






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






14. In the context of inventory management - the need for inventory as part of the routine production-sales cycle.






15. The goods and sernces that we buy from people in other countries.






16. 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.






17. Assets and liabili-ties that are not monetary assets and liabilities. Nonmonetary assets include inventory - fixed assets - and intangibles - and nonmonetary liabili-ties include deferred revenue.






18. A common or underlying element with which several variables are correlated.






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






20. 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.






21. An option strategy that combines two bull or bear spreads and has three exercise prices.






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






23. The price at which an asset or liability would change hands between a willing buyer and a willing seller whe n the former is not under any compulsion to buy and the latter is not under any compulsion to sell; the price that would be received to sell






24. Segment profit (loss) divided by seg-ment assets.






25. 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.






26. A corporate transac-tion in which management repurchases all out-standing common stock - usually using the proceeds of debt issuance.






27. A feature of futures markets in which futures prices provide valuable information about the price of the underlying asset.






28. Cash-settled for-ward contracts - used predominately with respect to foreign exchange forwards.






29. The cost to a com pany of issu-ing preferred stock; the dividend yield that a com-pany must commit to pay preferred stockholders.






30. In accounting - a liability of uncertain tim-ing or amount.






31. A measurement scale that sorts data into categories that are ordered (ranked) with respect to some characteristic.






32. The amount of book value (also called carrying value) of common equity per share of common stock - calculated by dividing the book value of shareholders' equity by the num-ber of shares of common stock outstanding.






33. A form of restructuring in which sharehold-ers of the parent company are given shares in a /Jewl y c eated entity in e~change for their shares of the pare ~ company.






34. Describes a distribution that is more peaked than a normal distribution.






35. A quoting convention that annualizes - on a 360-day year - the discount as a percentage of face value.






36. Huidity When receipts lag - creating pres-sure fmm the decreased available funds.






37. The relationship between the option price and the underlying price - which reflects the sensi-tivity of the price of the option to changes in the price of the underlying.






38. A transformation that subtracts the value of the time series in period t - 1 from its value in period t.






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






40. The last in - first out - method of accounting for inventory - which matches sales against the costs of items of inventory in the reverse order the items were placed in inventory (i.e. - inventory produced or acquired last are assumed to be sold firs






41. A function giving the probability that a random variable is less than or equal to a specified value.






42. Company growth in output or sales that is achieved by buying the necessary resources externally (i.e. - achieved through mergers and acquisitions) .






43. The difference between reported net income on an accrual basis and the cash flows from operating and investing activities.






44. 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






45. The smaller the stake that managers have in the company - the less is their share in bearing the cost of excessive perquisite consumption or not giving their best efforts in running the company.






46. A loss in value caused bychanges in price levels. Monetary assets experi-ence purchasing power losses during periods ofinflation.






47. When parties agree to exchange only the net amount owed from one party to the other.






48. The most common type of commun-size analysis - ill which the accounts in a given period are compared to a benchmark item in that same year.






49. Revenue after adjustments (e.g. - for estimated returns or for amounts unlikely to be collected).






50. The P/E to-growth ratio - calculated as the stock's PI E divided by the expected earnings growth rate.