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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 reduction or discount to value that reflects the lack of depth of trading or liquid-ity in that asset's market.






2. The difference between current assets and current liabilities.






3. The probability that an asset's value moves down in a model of asset price dynamics.






4. A normal operating expense that has been paid in advance of when it is due.






5. An option strategy that involves selling a put with a lower exercise price and buying a put with a higher exercise price. It can also be exe-cuted with calls.






6. An activity ratio equal to the number of days in the period divided by inventory turnover over the period.






7. An account that offsets another account.






8. A trend in which the dependent vari-able changes at a constant rate with time.






9. A merger involving compa-nies that are in unrelated businesses.






10. The date of the final paymen on a swap' also - the swap's e piration date.






11. 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






12. A method of revenue recognition in which - in each accounting period - the company estimates what percentage of the contract is complete and then reports that per-centage of the total contract revenue in its income statement.






13. The risk associated with the pos-sibility that a payment due at a later date will not be made.






14. 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.






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. 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.






17. A finite set of level sequential cash flows.






18. A ratio in property valua-tion; net operating income divided by sale price. Also known as the going-in rate.






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






20. Theories that posit that cor-porate executives are motivated to engage in mergers to maximize the size of their company rather than shareholder value.






21. A merger; the term may be applied to any transaction - but is often used in reference to hos-tile transactions.






22. The difference between inventory reported as FIFO and 'nventory reported as LIFO (FIFO inventory value less LIFO inventory val e).






23. In reference to corporate taxes - a system that imputes - or attributes - taxes at only one level of taxation. For countries using an imputation tax system - taxes on dividends are effectively levied only at the shareholder rate. Taxes are paid at th






24. The company in a merger or acquisition that is being acquired.






25. An illiquidity discount that occurs when an investor sells a large amount of stock rela-tive to its trading volume (assuming it is not large enough to constitute a controlling ownership).






26. The elimination or phasing out of reg-ulations on economic activity.






27. The rate demanded by purchasers of bonds - given the risks associated with future cash payment obligations of the particular bond issue.






28. Long-term assets with physical sub-stance that are used in company operations - such as land (property) - plant - and equipment.






29. Transactions that are denominated in a currency other than a com-pany's functional currency.






30. An activity ratio calculated as purchases divided by average trade payables.






31. An option on the yield spread on a bond.






32. In probability - with reference to an event 5 - the event that 5 does not occur; in eco-nomics - a good that is used in conjunction with another good.






33. The fixed price or rate at which the transaction scheduled to occur at the expiration of a forward contract will take place. This price is agreed on at the initiation date of the contract.






34. The differ-ence between reported net income on an accrual basis and the cash flows from operating and investing activities compared to the average net operating assets over the period.






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






36. Uncorrelated; at a right angle.






37. An agreement between two parties to exchange a series of future cash flows.






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






39. The use of fixed costs in operations.






40. Members ips in a derivatives exchange.






41. An approach to decomposing return on investment - e.g. - return on equity - as the product of other financial ratios.






42. A potential business combina-tion that is endorsed by the managers of both companies.






43. A level of inventory beyond anticipated needs that provides a cushion in the event that it takes longer to replenish inventory than expected or in the case of greater than expected demand.






44. An intangible that cannot be acquired singly and that typically possesses an indefinite benefit period; an example is account-ing goodwill.






45. A swap in which the floating payments have an upper limit.






46. Changes to equity that bypass (are not reported in) the income statement; the diffe rence between comprehensive income and net income.






47. A sample measure of the degree of dispersion of a distribution - calculated by dividing the sum of the squared deviations from the sam-ple mean by the sample size minus 1.






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






49. An acquisition in which the acquirer gives the target company's shareholders some combination of cash and securities in exchange for shares of the target company's stock.






50. A reduction in the value of an asset as stated in the balance sheet.