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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 use of computer networks to conduct financial transactions electronically.






2. The risk that a financial instrument cannot be purchased or sold without a significant concession in price due to the size of the market.






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






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






5. With the accounting systems - a formal record of increases and decreases in a specific asset - liability - component of owners' equity - rev-enue - or expense.






6. The income tax owed by the company on the basis of taxable income.






7. The analysis of the strength of the linear relationship between two data series.






8. An operating segment or one level below an operating segment (referred to as a component) .






9. An activity ratio equal to rev-enue divided by average receivables.






10. The use of inventory as collat-eral for a loan. Though the lender has claim to some or all of the company's inventory - the com-pany may still sell or use the inventory in the ordi-nary course of business.






11. With reference to assets - the amount of cash or cash equivalents that could currently be obtained by sell ing the asset i an orderly disposal; with reference to lia-bilities - the undiscounted amount of cash or cash equivalents expected to be paid t






12. An arrangement whereby someone - an agent - acts on behalf of another per-son - the principal.






13. 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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14. Probabilities reflecting beliefs prior to the arrival of new information.






15. 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.






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






17. The amount of time between check issuance and a check's clearing back against the company's account.






18. A stage of growth in which a company typically enjoys rapidly expanding markets - high profit margins - and an abnormally high growth rate in earnings per share.






19. With reference to grouped data - the most frequently occurring interval.






20. The relationship of the quantity of an asset being hedged to the quantity of the deriva-tive used for hedging.






21. An offset to revenue reflecting any cash refunds - credits on account - and discounts from sales prices given to cus-tomers who purchased defective or unsatisfactory items.






22. A level of inventory beyond anticipated needs that provides a cushion in the event that it takes longer to replenish inventory than expected or in the case of greater than expected demand.






23. A reduction in the number of shares outstanding with a corresponding increase in share price - but no change to the company's underlying fundamentals.






24. The compound rate of growth of one unit of currency invested in a port-folio during a stated measurement period; a mea-sure of investment performance that is not sensitive to the timing and amount of withdrawals or additions to the portfolio.






25. An asset's sensitivity to a particular factor; a mea-sure of the response of return to each unit of increase in a factor - holding all other factors constant.






26. An extra return that compen-sates investors for expected inflation.






27. 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.






28. An approach to decomposing return on investment - e.g. - return on equity - as the product of other financial ratios.






29. Common sharehold-ers' equity minus intangible assets from the bal-ance sheet - divided by the number of shares outstanding.






30. A statistical test for differ-ences based on paired observations drawn from samples that are dependent on each other.






31. A factor related to the econ-omy - such as the inflation rate - industrial produc-tion - or economic sector membership. acroeconomic factor model A multifac tor model in which the factors are surprises in macroeco-nomic variables that significan tly






32. The smallest level of significance at whichthe null hypothesis can be rejected; also called themarginal significance level.






33. Potential future payments to the seller that are contingent on the achieve-ment of certain agreed on occurrences.






34. An unlimited funds environment assumes that the company can raise the funds it wants for all profitable projects simply by paying the required rate of return.






35. With eference to grouped data - a se t or val-ues within w ich an observation falls.






36. The amount at which an asset or liability is valued for tax purposes.






37. The official price - designated by the clearinghouse - from which daily gains and losses will be determined and marked to market.






38. A profitabili ty ratio calcu-lated as EBIT divided by the sum of short-and long-te debt and equi ty.






39. Resolving differences in indications of value when estimating market value.






40. A type of weighted mean computed by averaging the reciprocals of the ohservations - then taking the reciprocal of that average.






41. A contract signed by both parties to a merger that clarifies the details of the transaction - including the terms - war-ranties - conditions - termination details - and the rights of all parties.






42. The strategy of using futures contracts to enter the market without an immediate outlay of cash.






43. Under IFRS - the liability of a defined benefit pension.






44. 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






45. Long-term assets with physical sub-stance that are used in company operations - such as land (property) - plant - and equipment.






46. Earnings adjusted for nonrecur-ring - non-economic - or other unusual items to elim-inate anomalies andlor facilitate comparisons.






47. The amount available for fixed costs and profit after paying variable costs; rev-enue minus variable costs.






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. The government's holding of foreign cun; - e.!}cy.






50. A mean computed after assigning a stated percent of the lowest values equal to one specified low value - and a stated percent of the highest values equal to one specified high value.