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






2. An updated probability that reflects or comes after new information.






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






4. Weights that are used to compute a binomial option price. They are the probabilities that would apply if a risk-neutral investor valued an option.






5. 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.






6. Regulation that allowsprices to reflect only the actual average cost ofproduction and no monopoly profits.






7. The rate of dividend (and earnings) growth that can be sustained over time for a given level of re turn on equity - keeping the capi tal structure constant and wi thout issuing addi tional common stock.






8. The process of obtaining a sample.






9. Cash-settled for-ward contracts - used predominately with respect to foreign exchange forwards.






10. Events such that only one can occur at a time.






11. A rule explaining the uncon-ditional probability of an event in terms of proba-bilities of the event conditional on mutually exclusive and exhaustive scenarios.






12. A form of centralized risk management that typically encompasses the man-agement of a broad variety of risks - ind uding insuran -ce risk.






13. An option strategy in which a long position in a certain number of options is offset by a short position in a certain number of other options on the same underlying - resulting in a risk-free position.






14. A striNgent measure of liquidity th t ind'cates a company's ab'li ty to satisfY current liabilities with its most liquid assets - calcu-lated as (cash + short-tenn marketable invest-ments + receivables) divided by current liabilities.






15. Total assets minus total liabilities.

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16. Activities which are associated with the acquisition and disposal of property - plant - and equipment; intangible assets; other long-term assets; and both long-term and short-term investments in the equity and debt (bonds and loans) issued by other c






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






18. A theory of economic growth based on the view that the growth of real GDP per person is temporary and that when it rises above subsistence level - a population explo-sion eventually brings it back to subsistence level.






19. Financial statements that are not accompanied by an auditor's opinion letter.

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20. A model for pncmg futurescontracts in which the futures price is determinedby adding the cost of carry to the spot price.






21. The risk associated with accounting standards that vary from country to country or with any uncertainty about how certain transac-tions should be recorded.






22. The arithmetic mean value of a population; the arithmetic mean of all the obser-vations or values in the population.






23. A swap in which each party makes ayments to the other in different currenmes.






24. The differential of infor-mation between corporate insiders and outsiders regarding the company's performance and prospects. Managers typically have more informa-tion about the company's performance and prospects than owners and creditors.






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






26. A quantity - calculated based on a sam-ple - whose value is the basis for deciding whether or not to reject the null hypothesis.






27. A valuation ratio calculated as price per share divided by cash flow per share.






28. The price multiple for a stock assumed to hold at a stated future time.






29. The owners' remaining claim on the company's assets after the liabilities are deducted.






30. With reference to a sample - the mean of the absolute values of deviations from the sample mean.






31. The amount for which one can sell some-thing - or the amount one must pay to acquire something.






32. The sale by a foreign firm of exports at a lower price than the cost of production.






33. The argument that it is necessary to protect a new industry to enable it to grow into a mature industry that can compete in world markets.






34. The use of fixed costs in operations.






35. The unsold units of product on hand.






36. 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.






37. Next twelve months P/E: current market price divided by an estimated next twelve months EPS.






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






39. Depositary Receipt A negotiable certifi -cate issued by a depositary bank that represen ts ownersh ip in a non-U .S. company's deposi ted equity (i.e. - equity held in custody by the deposi-tary bank in the company's home market).






40. A market index portfolio.






41. The purchase of the accumulated shares of a hostile investor by a company that is targeted for takeover by that investor - usually at a substan-tial premium over market price.






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






43. 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.






44. The actual cash that would be avail-able to the company's investors after making all investments necessary to maintain the company as an ongoing en terprise (also referred to as free cash flow to the firm); the internally generated funds that can be






45. An option strategy that involves buying a call with a lower exercise price and selling a call with a higher exercise price. It can also be exe-cuted with puts.






46. The risk that failures by company man-agers to effectively manage a company's environ-mental - social - and governance risk exposures will lead to lawsuits and other judicial remedies - resulting in potentially catastrophic losses for the company; th






47. The evaluation of risk-adjusted performance; the evaluation of invest-ment skill.






48. A European-style option with a value at maturity equal to the difference between the stock price at maturity and the average stock price during the life of the option - or $0 - whichever is greater.






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






50. A method of account-ing for joint ventures where the venturer's share of the assets - liabilities - income and expenses of the joint venture are combined on a line-by-line basis with similar items on the venturer's financial statements.