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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. Shares that were issued and subse-quently repurchased by the company.






2. To defer the decision to invest in a future projecn until the outcome of some or all of a current project is known. -Projects are sequenced through time - so that investing iN a project creates the option to invest in future projects.






3. An activity ratio equal to the number of days in the period divided by inventory turnover over the period.






4. A record of receipts from exports of goods and services - payments for imp<ilrts of goods and services - net income and net transfers received from the rest of the world.






5. A solvency ratio calculated as total debt divided by total assets.






6. In the con-text of private company valuation - valuation model based on an assumption of a constant growth rate of free cash flow to the firm or a con-stant growth rate of free cash flow to equity.






7. An activity ratio calculated as revenue divided by average total assets.






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






9. Asset inflows not directly related to the ordi-nary activities of the business.






10. 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.






11. Describes a scale constructed so that equal intervals on the vertical scale represent equal rates of change - and equal intervals on the horizontal scale represent equal amounts of change.






12. 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.






13. Internal or external limita-tions on investments.






14. A probability distribution that specifies the probabilities for a group of related random variables.






15. A number between 0 and 1 describing the chance that a stated event will occur.






16. A measure of sensitivity; the incremental change in one variable with respect to an incre-mental change in another variable.






17. The company in a merger or acquisition that is being acquired.






18. A diagram with branches emanating from nodes representing either mutually exclu-sive chance events or mutually exclusive decisions.






19. Purchases of one product that are per-mitted by the seller only if the consumer buys another good or service from the same firm.






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






21. A result indicating that the null hypothesis can be rejected; with reference to an estimated regression coefficient - frequently understood to mean a result indicating that the corresponding population regression coefficient is different from O.






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






23. A form of data min-ing that applies information developed by previ-ous researchers using a dataset to guide curren t research using the same or a related dataset.






24. 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.






25. An option to enter into a swap.






26. A set of observations on a variable's out-comes in different time periods.






27. The potential for asymmetric information to bring about a general decline in product quality in an industry.






28. The variability around the central tendenoy.






29. A widely used approach to estimate an overall capitalization rate. It is based on the premise that debt and equity financ-ing is typically involved in a real estate transaction.






30. An option that gives the holder the right to sellan underlying asset to another party at a fixedprice over a specific period of time.






31. The contribution to active risk squared resulting from the portfolio's different-than-benchmark exposures relative to factors specified in the risk model.






32. Residual income after the forecast horizon.






33. A method for estimating the betafor a company or project; it requires using a com-parable company's beta and adjusting it for finan-cialleverage differences.






34. The date that a shareholderlisted on the corporation's books will be deemedto have ownership of the shares for purposes ofreceiving an upcoming dividend; two businessdays after the ex-dividend date.






35. Division ofnet operating income by an overall capitalization rate to arrive at market value.






36. The value of an option at expiration.






37. Valuation approach that values an asset based on pricing multiples from sales of assets viewed as similar to the subject asset.






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






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. The purchase of some portion of one company by another; the purchase may be for assets - a definable segment of another entity - orthe purchase of an entire company.






41. The property of having a constantvariance; refers to an error term that is constantacross observations.






42. 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






43. An investment decision rule that accepts projects or investments for which the IRR is greater than the opportunity cost of capital.






44. A country that is lending more to the rest of the world than it is borrowing from it.






45. The absorption of one company by another; two companies become one entity and one or both of the pre-merger companies ceases to exist as a separate entity.






46. A profitability ratio calcu-lated as net income divided by average total assets; indicates a company's net profit generated per dollar invested in total assets.






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






48. A transaction in exchange-listed deriva-tive markets in which a party re-enters the market to close out a position.






49. An algorithm that pro-duces uniformly distributed random numbers between 0 and 1.






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