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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. With reference to statistical infer-ence - the subdivision dealing with the testing ofhypotheses about one or more populations.






2. FIrm The cash flow available to the company's suppliers of capital after all operat-ing expenses (including taxes) have been paid and necessary investments in working and fixed capital have been made.






3. Excess inventory that is held in anticipation of increased demand - often because of seasonal patterns of demand.






4. Mean active return divided by active risk; or alpha divided by the standarddeviation of diversifiable risk.






5. Rate of return that dis-counts future cash flows from an investment to the exact amount of the investment; the discount rate that makes the present value of an invest-ment's costs (outflows) equal to the present value of the investment's benefits (in






6. A wholly-owned sub-sidiary of a company that is established to provide financing of the sales of the parent company.






7. With reference to statisti. cal inference - the subdivision dealing with estimating the value of a population parameter.






8. The date on which a derivative con-tract expi res.






9. The actual value of a variable minus its pre-dicted (or expected) value.






10. Momentum indicators based on price.






11. Financial ratios involving bal-ance sheet items only.






12. 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.






13. The error of rejecting a true null hypothesis.






14. The practice of determining a model by extensive searching through a dataset for statisti-cally significant patterns.






15. All members of a specified group.






16. The probability of an event not conditioned on another event.






17. 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






18. Agreements made by a company in bankruptcy under which a company's capital struc-ture is altered and/ or alternative arrangements are made for debt repayment; U.S. Chapter II bankruptcy. The company emerges from bank-ruptcyas a going concern.






19. A type of swap transaction used as a credit derivative in which one party makes peri-odic payments to the other and receives the prom-ise of a payoff if a third party defaults.






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






21. The value of exports of goods and ser-vices minus the value of imports of goods and services.






22. A form of active strategy which entails scheduling maturities on a systematic basis within the investment portfolio such that invest-ments are spread out equally over the term of the ladder.






23. A country's record of international trading - borrowing - and lending.






24. A variation of a straddle in which the put and call have different exercise prices.






25. The condition in which supply equals demand.






26. The hypothesis that higher debt levels discipline managers by forcing them to make fixed debt service payments and by reducing the company's free cash flow.






27. The fair value of the estimated costs to be incurred at the end of a tangible asset's service life. The fair value of the liability is determined on the basis of discounted cash flows.






28. A trader who offers to buy or sell futures contracts - holding the position for only a brief period of time. Scalpers attempt to profit by buy-ing at the bid price and selling at the higher ask price.






29. A variation of the market approach; establishes a value estimate based on pricing multiples derived from the acquisition of control of entire public or private companies that were acquired.






30. The portion of an entity's income that is subject to income taxes under the tax laws of its jurisdiction.






31. The science of describing - analyzing - and drawing conclusions from data; also - a collection of numerical data.






32. A profitability ratio calculated as earnings before taxes divided by revenue.






33. A portfolio offering the highest expected return for a given level of risk as mea-sured by variance or standard deviation of return.






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






35. An offset to property - plant - and equipment (PPE) reflecting the amount of the cost of PPE that has been allocated to current and previous accounting periods.






36. Accounting in which some income items are reported as part of stockholders' equity rather than as gains and losses on the income statement; certain items of comprehensive income bypass the income statement and appear as direct adjustments to sharehol






37. In accounting contexts - cash on hand (e.g. - petty cash and cash not yet deposited to the bank) and demand deposits held in banks and similar accounts that can be used in payment of obligations.






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






39. With reference to fundamental factor models - the value of the attribute for an asset minus the average value of the attribute across all stocks - divided by the standard deviation of the attribute across all stocks.






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






41. A condition in the futures markets in which the price at which a transaction would be made is at or beyond the price limits.






42. Netting the market values of all contracts - not just derivatives - between parties.






43. Unsecured short-term corporate debt that is characterized by a single payment at maturity.






44. Debt or equity financial assets bought with the inten-tion to sell them in the near term - usually less than three months; securities that a company intends to trade.






45. Bias that may result when failed or defunct companies are excluded from member-ship in a group.






46. An option strategy in which a position in an asset is converted to a risk-free position with a position in a specific number of options. The number of options per unit of the underlying changes through time - and the position must be revised to maint






47. Fixed-income secuntles in which the holder of the security has the right to withhold payment of the full amount due at matu-ri ty if a credi t even t occurs.






48. A portfolio with sensitivity of 1to the factor in question and a sensitivity of 0 to allother factors.






49. The theory that managers take into account how their actions might be inter-preted by outsiders and thus order their prefer-ences for various forms of corporate financing. Forms of financing that are least visible to out-siders (e.g. - internally gen






50. The market price of an asset or lia-bility that trades regularly.






Can you answer 50 questions in 15 minutes?



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