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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 grouped data - the most frequently occurring interval.






2. An estimate of the country spread (country equity premium) for a develop-ing nation that is based on a comparison of bonds yields in country being analyzed and a developed country. The sovereign yield spread is the differ-ence between a government bo






3. An opportunity to conduct an arbitrage; an opportunity to earn an expected positive net profit without risk and with no net investment of money.






4. Cash and investments (specifi-cally cash - cash equivalents - and short-term investments) .






5. Cannibalization occurs when an investment takes customers and sales away from another part of the company.






6. An agreement between two parties to exchange a series of future cash flows.






7. A combination of a long cap and a short floor - or a short cap and a long floor. A col-lar in general can have an underlying other than an interest rate.






8. A multifactor model in which the factors are attributes of stocks or com-panies that are important in explaining cross-sectional differences in stock prices.






9. 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.






10. The time remaining in the life of a derivative - typically expressed in years.






11. A quantitative measure of skew (lack of symmetry); a synonym of skew.






12. The principle that dol-lar amounts indexed at the same point in time are additive.






13. Securities held by banks or other financial intermediaries for trading purposes.






14. The average return in excess of the risk-free rate divided by the standard deviation of return; a measure of the average excess return earned per unit of standard deviation of return.






15. A balance sheet that does not show subtotals for current assets and current liabilities.






16. An account that offsets another account.






17. A measure of correlation applied to ranked data.






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






19. In reference to corporate taxes - a system that imputes - or attributes - taxes at only one level of taxation. For countries using an imputation tax system - taxes on dividends are effectively levied only at the shareholder rate. Taxes are paid at th






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






21. A record of the change in official reserves - which are the government's holdings offoreign currency.






22. All changes in equity other than contributions by - and distributions to - own-ers; income under clean surplus accounting; includes all changes in equity during a period except those resulting from investments by own-ers and distributions to owners;






23. Future benefits promised to the employee regardless of continuing service. Bene-fits typically vest after a specified period of service or a specified period of service combined with age.






24. A fUl !lction giving the probability of joint occurrences of values of stated random variables.






25. A public document that provides the material facts concerning matters on which shareholders will vote.






26. Making forecasts - estimates - or judgments about a larger group from a smaller group actually observed; using a sample statistic to infer the value of an unknown population parameter.






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






28. Rules for portfolio selection that focus on the risk that portfolio value will fall below some minimum acceptable level over some time horizon.






29. The incor-poration of production planning into inventory management. A MRP analysis provides both a materials acquisition schedule and a production schedule.






30. Aka 'Market efficiency.






31. A form of restructuring in which sharehold-ers of a parent company receive a proportional number of shares in a new - separate entity; share-holders end up owning stock in two different companies where there used to be one.






32. The use of inventory as collateral for a loan. The inventory is segregated and held in trust - and the proceeds of any sale must be remitted to the lender immediately. t-Test A hypothesis test using a statistic (I-statistic) that follows a t-<listrib






33. The cash flow that is real-ized because of a decision; the changes or incre-ments to cash flows resulting from a decision or action.






34. Agency costs that are incurred despite adequate monitoring and bonding of management.






35. Debt and equity secu-rities not classified as either held-to-maturity or held-for-trading securities. The investor is willing to sell but not actively planning to sell. In general - available-for-sale securities are reported at fair value on the bala






36. Linear regression involv-ing two or more independent variables.






37. The rule that the joint probability of events A and B equals the probability of A given B times the probability of B.






38. 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






39. The revaluation of a financial asset or liability to its current market value or fair value.






40. The after-tax net operating profits as a percent of total assets or capital.






41. A theory of regulatory behavior that holds that regulators must take account of the demands of three groups: legislators - who established and oversee the regulatory agency; firms in the regulated industry; and consumers of the regulated indus-try's






42. The volatility that option traders use to price an option - implied by the price of the option and a particulau option-pricing model.






43. The positive square root of the variance; a measure of dispersion in the same units as the original data.






44. With reference to cash flow statements - a format for the presenta-tion of the statement which - in the operating cash flow section - begins with net income then shows additions and subtractions to arrive at operatingcash flow.






45. Additional margin that must be deposited in an amount sufficient to bring the balance up to the initial margin requirement.






46. The principle that the approximate num-ber of years necessary for an investment to double is 72 divided by the stated interest rate.






47. The Eurodollar rate at which London banks lend dollars to other London banks; considered to be the best representative rate on a dollar borrowed by a private - high-quality borrower.






48. 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.






49. A stock's current mar-ket price divided by the most recent four quarters of earnings per share.






50. A contract in which one party has the right to claim a payment from another party in the event that a specific credit event occurs over the life of the contract.