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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 transaction whereby the target company management team converts the target to a privately held company by using heavy borrowing to finance the purchase of the target company's outstanding shares.






2. With reference to estimators - describes an estimator for which the probability of estimates close to the value of the population parameter increases as sample size increases.






3. Managers who hold portfolios that differ from their benchmark port-folio in an attempt to produce positive risk-adjusted returns.






4. Covering or containing all possible outcomes.






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






6. A variation of the market approach; establishes a value estimate based on the observed multiples from trading activity in the shares of public companies viewed as reasonably comparable to the subject private company.






7. An inventory accounting method that averages the total cost of available inventory items over the total units avail-able for sale.






8. A stage of growth in which the com-pany reaches an equilibrium in which investment opportunities on average just earn their opportu-nity cost of capital.






9. A condition in the futures markets in which the benefits of holding an asset exceed the costs - leaving the futures price less than the spot price.






10. 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.






11. The feature of a futures contract giv-ing the short the right to make decisions about what - when - and where to deliver.






12. The single-period interest rate for a completely risk-free security if no infla-tion were expected.






13. When a company has a single risk management group that monitors and controls all of the risk-taking activities of the organization.






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






15. The standard deviation of the differ-ence in returns between an active investment portfolio and its benchmark portfolio; also called tracking error volatility - tracking risk - and active risk.






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






17. An approach to portfolio analysis using expected means - variances - and covariances of asset returns.






18. The probability of correctly rejecting the null-that is - rejecting the null hypothesis when it is false.






19. A method of presentation of accounting transactions in which effects on assets appear at the left and effects on liabilities and equity appear at the right of a central dividing line; also known as T-account format.






20. Hirschman Index A measure of rna ket concentration that is calculated by summing the squared mar et shares for competing companies in an industry; high HHI readings or mergers that would result in large HHI increases are more likely to result in regu






21. The excess of assets over liabilities; the residual interest of shareholders in the assets of an entity after deducting the entity's liabilities.

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






23. The share price at a particular point in the future.






24. The difference between the yield on a bond and the yield on a default-free security - usu-ally a government note - of the same maturity. The yield spread is primarily determined by the mar-ket's perception of the credit risk on the bond.






25. An option in which the underly-ing is an interest rate.






26. FRA A contract in which the initial value is intentionally set at a value other than zero and therefore requires a cash payment at the start from one party to the other.






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






28. A qualitative-dependent-variable multi-ple regression model based on the logistic proba-bility distribution.






29. The earnings per share that a busi-ness could achieve currently under mid-cyclical conditions.






30. The risk that a company will suffer an extended diminution in market value relative to other companies in the same industry due to a demonstrated lack of concern for environmental - social - and governance risk factors.






31. Assets less liabilities; the residual interest in the assets after subtracting the liabilities.






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






33. Expectations that differfrom consensus expectations.






34. The granting of stock to employees as a form of compensation.






35. Options that - if exercised - would require the payment of more money than the value received and therefore would not be cur-rently exercised.






36. 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






37. Approach that values a private company based on the values of the underlying assets of the entity less the value of any related liabilities.






38. The condition in which supply equals demand.






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






40. A valuation indicator based on past pdce movement.






41. Observations that are depen-dent on each other.






42. EPS) Netincome - minus preferred dividends - divided bythe number of common shares outstanding con-sidering all dilutive securities (e.g. - convertibledebt and options); the EPS that would result if alldilutive securities were converted into commonsh






43. The compound rate of growth of one unit of currency invested in a port-folio during a stated measurement period; a mea-sure of investment performance that is not sensitive to the timing and amount of withdrawals or additions to the portfolio.






44. Not due to be consumed - converted into cash - or settled within one year after the bal-ance sheet date.






45. Above average or abnormally high growth rate in earnings per share.






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






47. The day that the company actually mails out (or electronically transfers) a dividend payment.






48. Approach to translating for-eign currency financial statements for consolida-tion in which all assets and liabilities are translated at the current exchange rate. The cur-rent rate method is the prevalent method of translation.






49. A measure of VAR equivalentto the analytical method bu t that refers to the use of delta to estimate the option's price sensitivity.






50. The company in a merger or acquisition that is acquiring the target.