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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. As used in this book - the use of a spreadsheet in executing a dividend discount model valuation - or other present value model valuation.






2. The market value of a swap.






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






4. A criterion asserting that the optimal portfolio is the one that minimizes the probability that portfolio return falls below a threshold level.

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






6. 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






7. The distribution of all distinct possible values that a statistic can assume when computed from samples of the same size ran-domly drawn from the same population.






8. In the context of the weighted average cost of capital (WACC) - a break point is the amount of capital at which the cost of one or more of the sources of capital changes - leading to a change in the WACC.






9. Probabilities reflecting beliefs prior to the arrival of new information.






10. An equation expressing the equiva-lence (parity) of a portfolio of a call and a bondwith a portfolio of a put and the underlying -which leads to the relationship between put andcall prices






11. Ratios that measure a company's ability to meet its long-term obligations.






12. The return on a portfolio minus the return on the portfolio's benchmark.






13. The number of observations in a given interval (for grouped data) .






14. Small numbers of observations at either extreme (small or large) ofa sample.






15. Quantiles that divide a distribution into four equal parts.






16. The differ-ence between net operating assets at the end and the beginning of the period.






17. Systems that capture transaction data at the physical location in which the sale is made.






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






19. The minimum real wage rate needed to maintain life.






20. A forward contract calling for one party to make a fixed interest payment and the other to make an interest pay-ment at a rate to be determined at the contract expiration.






21. A comparison of revenues with working capital to produce a measure that shows how efficiently working capital is employed.






22. The expected return in excess of the risk-free rate for a portfolio with a sensitivity of 1 to one factor and a sensitivity of 0 to all other factors.






23. An indicator of profitability - calculated as net income divided by revenue; indicates how much of each dollar of revenues is left after all costs and expenses.






24. When liabilities translated at the current exchange rate are greater than assets translated at the current exchange rate. Liabilities exposed to translation gains or losses exceed the exposed assets.






25. A model of stock val-uation that views a stock's intrinsic value as the present value of expected future free cash flows to equity.






26. A solvency ratio calculated as total debt divided by total debt plus total share-holders ' equi ty.






27. Describes a time series whenits expected value and variance are cons tan t andfinite in all periods and when its covariance withitself for a fixed number of periods in the past orfuture is constant and finite in all periods.






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






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






30. The number of units pro-duced and sold at which the company's operating profit is zero (revenues = operating costs).






31. The fixed price at which an option holder can buy or sell the underlying.






32. An approach to valuation that involves using a price multiple to evaluate whether an asset is relatively fairly valued - rela-tively undervalued - or relatively overvalued when compared to a benchmark value of the multiple.






33. When a company is acquired and the purchase price is less than the fai r value of the net assets. The current treatment of the excess of fair value over the purchase price is diffe re t under IFRS and U.S. CAAP. The excess is never accounted for as n






34. A solvency ratio calculated as total debt divided by total shareholders' equity.






35. An estimate of the average time that elapses between paying suppliers for materi-als and collecting cash from the subsequent sale of goods produced.






36. Bias introduced by systemati-cally exclua ing some members of the population according to a particular attribute-for example - the bias introduced when data availability leads to certain observations being excluded from the analysis.






37. The most frequently occurring value in a set of observations.






38. Costs that remain at the same level regardless of a company's level of production and sales.






39. Options that relate to investment deci-sions such as the option to time the start of a proj-ect - the option to adjust its scale - or the option to abandon a project that has begun.






40. Any outcome or specified set of outcomes of a random variable.






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






42. Tax expenses that have been recognized and recorded on a company's income statement but which have not yet been paid.






43. Items that affect comprehensive income but which bypass the income statement.






44. Factor models that combine features of more than one type of factor model.






45. The sum of market value of common equity - book value of preferred equity - and face value of debt.






46. An activity ratio equal to the number of days in a period divided by the inventory ratio for the period; an indication of the number of days a company ties up funds in inventory.






47. Large industry groupings.






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






49. 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.






50. A measurement scale that not only ranks data but also gives assurance that the differ-ences between scale values are equal.