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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 percentage of a market that a particular fi rm supplies; used as the primary measure of monopoly power.






2. The expected return on equi-ties minus the risk-free rate; the premium that investors demand for investing in equities.






3. The perceived ability of the bor-rower to pay what is owed on the borrowing in a timely manner; it represents the ability of a com-pany to withstand adverse impacts on its cash flows.






4. With respect to double-entry accounting - a debit records increases of asset and expense accounts or decreases in liability and owners' equity accounts.






5. The study of how data can besummarized effectively.






6. With reference to statistical inference - astatement about one or more populations.






7. The difference between net operating assets at the end and the beginning of the period compared to the average net operating assets over the period.






8. Market makers that buy and sell by quoting a bid and an ask price. They are the primary providers ofliquidity to the market.






9. An activity ratio calculated as revenue divided by average total assets.






10. 1) A contract on an interest rate - whereby at periodic payment dates - the writer of the cap pays the difference between the market interest rate and a specified cap rate if - and only if - this differ-ence is positive. This is equivalent to a strea






11. A swap in which the underlying is an interest rate. Can be viewed as a currency swap in which both currencies are the same and can be created as a combination of currency swaps.






12. The amount that each unit sold contributes to covering fixed costs- that is - the difference between the price per unit and the variable cost per unit.






13. The portfolio with the each given level of minimum variance for expected return.






14. The normal density with mean equal to 0 and standard deviation (0') equal to l.






15. An observation drawn from a uni-form distribution.






16. 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






17. The tendency for the winner in cer-tain competitive bidding situations to overpay - whether because of overestimation of intrinsic value - emotion - or information asymmetries.

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18. The interest earned each period on the original investment; interest calculated on the principal only.






19. A floating-rate note or bond in which the coupon is adjusted at a multiple of a benchmark interest rate.






20. A balance sheet liability that arises when a deficit amount is paid for income taxes relative to accounting profit. The taxable income is less than the accounting profit and income tax payable is less than tax expense. The company expects to eliminat






21. The allocation of funds to rela-tively long-range projects or investments.






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






23. A yield on a basis comparable to the quoted yield on an interest-bearing money market instrument that pays interest on a 360-<iay basis; the annualized holding period yield - assuming a 360-<iay year.






24. The market in which the currency of one country is exchanged for the cur-rency of another.






25. A liquidi ty ratio calculated as (cash + short-term marketable investments) divided by current liabilities; measures a company's ability to meet its current obligations with just the cash and cash equivalents on hand.






26. A capital rationing environment assumes that the company has a fixed amount of funds to invest.






27. A measure of the time needed to convert raw materials into cash from a sale; it con-sists of the number of days of inventory and the number of days of receivables.






28. The internal rate of return on a portfol io - taking account of all cash flows.






29. The price received to sell an asset or trans-fer a liability.






30. A function that specifies the probability that the random variable takes on a specific value.






31. Fees charged to companies b)' invest-menJ ~nkers and other costs assooiated witli: rai'.. ing new capital.






32. A situation in a futures market where the current futures price is greater than the current spot price for the underlying asset.






33. Promises by the company to pay benefits in the future - other than pension benefits - such as life insurance premiums and all or part of health care insurance for its retirees.






34. A long-term pattern of movement in a partic-ular direction.






35. Heteroskedasticity in the error variance that is correlated with the values of the independent variable(s) in the regression.






36. A business owned and operated by a single person.






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






38. In reference to assets - the amount paid to purchase an asset - including any costs of acquisition and! or preparation; with reference to liabilities - the amount of proceeds received in exchange in issuing the liability.






39. Describes a distribution with kurtosis identical to that of the normal distribution.






40. An acceler-ated depreciation method that involves depreciat-ing the asset at double the straight-line rate. This rate is multiplied by the book value of the asset at the beginning of the period (a declining balance) to calculate depreciation expense.






41. P/E calculated on the basis of a forecast of EPS; a stock's current price divided by next year's expected earnings.






42. The sensitivity of the option price to the risk-free rate.






43. The probability of a Type I error in testing a hypothesis.






44. Options originally created with expirations of sev-eral years.






45. A measure of correlation applied to ranked data.






46. A gain in value caused bychanges in price levels. Monetary liabilities expe-rience purchasing power gains during periods ofinflation.






47. A finite set of level sequential cash flows.






48. Stan-dard errors of the estimated parameters of a regression that correct for the presence of het-eroskedasticity in the regression's error term.






49. Assets used as benchmarks when applying the method of com parables to value an asset.






50. Amount that must be set aside each period to have $1 at some future point in time.







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