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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. A guarantee from the clear-inghouse that if one party makes money on a transaction - the clearinghouse ensures it will be paid.






2. A si gle numerical estimate of an unknown quantity - such as a population parameter.






3. A sample measure of the degree of a distribution's peakedness.






4. The ratio ofthe percentage change in operating income to the percentage change in units sold; the sensitivity of operating income to changes in units sold.






5. The estimated fair value of the price multiple - usually based on fore-casted fundamentals or comparables.






6. Attempts by management to encourage analysts to forecast a slightly lower number for expected earnings than the analysts would otherwise forecast.






7. With reference to assets - the amount of cash or cash equivalents that would have to be paid to buy the same or an equivalent asset today; with reference to liabilities - the un discounted amount of cash or cash equivalents that would be required to






8. A transaction between two affiliates - an investor company and an associate company such that the investor company records a profit on its income statement. An example is a sale of inven-tory by the investor company to the associate.






9. A scheme of measuring differ-ences. The four types of measurement scales are nominal - ordinal - interval - and ratio.






10. In the context ofmerger analysis - it is an estimate of a target com-pany's value found by discounting the company's expected future free cash flows to the present.






11. Options on individual stocks; also known as stock options.






12. A valuation multiple that relates the total market value of all sources of a company's capital (net of cash) to a measure of fundamental value for the entire company (such as a pre-interest earnings measure).






13. For data grouped into intervals - the fraction of total observations that are less than the value of the upper limit of a stated interval.






14. A random variable that can take on at most a countable number of possi-ble values.






15. Any test (or procedure) concerned with parameters or whose validity depends on assumptions concerning the population generat-ing the sample.






16. A financial covenant made in conjunction with existing debt that restricts a company's ability to incur additional debt at the same seniority based on one or more financial tests or conditions.






17. The variance of one variable - given the outcome of another.






18. When settling a contract - the risk that one party could be in the process of paying the counterparty while the counterparty is declar-ing bankruptcy.






19. A con-flict of interest that arises when the agent in an agency relationship has goals and incentives that differ from the principal to whom the agent owes a fiduciary duty.






20. Said of a sale in which proceeds are to be paid in installments over an extended period of time.






21. Income approach that estimates the value of all intangible assets of the business by capitalizing future earnings in excess of the estimated return requirements associated with working capital and fixed assets.






22. The amount of funds originally invested in a project or instrument; the face value to be paid at maturity.






23. A time series regressed on its own past values - in which the independent vari-able is a lagged value of the dependent variable.






24. The quantity of real CDP pro-duced by an hour of labor.






25. Limits imposed by a futures exchange on the price change that can occur from one day to the next.






26. The feature of a futures contract giv-ing the short the right to make decisions about what - when - and where to deliver.






27. A random variable for which the range of possible outcomes is the real line (all real numbers between (-00 and +(0) or some subset of the real line.






28. The value of skills and knowledgepossessed by the workforce.






29. The possibility that when we use a time-series sample - our statistical conclusion may be sensitive to the starting and ending dates of the sample.






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






31. Total company valme (the market value of debt - common equity - and preferred equity) minus the value of cash and investments.






32. Revenue after adjustments (e.g. - for estimated returns or for amounts unlikely to be collected).






33. The value per share of a no-growth company - equal to the expected level amount of earnings divided by the stock's req uired rate of return.






34. Assets that are expected to bene-fit the company over an extended period of time (usually more than one year).






35. Time thought of as advancing in dis-tinct finite increments.






36. The yield to maturity on a basis that ignores compounding.






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






38. The observation that P /Es tend to be high on depressed EPS at the bottom of a business cycle - and tend to be low on unusually high EPS at the top of a business cycle.






39. Standard errors of the esti-mated parameters of a regression that correct for the presence of heteroskedastici ty in the regres-sion's error te






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






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






42. A sample measure of the degree of a distribution's peakedness in excess of the normal distribution's peakedness.






43. The minimum real wage rate needed to maintain life.






44. In a nonconventional cash flow pattern - the initial outflow is not fol-lowed by inflows only - but the cash flows can flip from positive (inflows) to negative (outflows) again (or even change signs several times).






45. With respect to revenue recognition - a method that s ecifies that the portion of the total profit of the sale that . s recognized in each pe riod is deter-mined by the percentage of the total sales price for which the seller has received cash.






46. When disbursements are paid tooquickly or trade credit availability is limited -requiring companies to expend funds beforethey receive funds from sales that could cover theliability.






47. The portfolio with the each given level of minimum variance for expected return.






48. A result in statistics that states that the sample mean computed from large sam-ples of size n from a population with finite vari-ance will follow an approximate normal distribution with a mean equal to the population mean and a variance equal to the






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






50. Correlation between adj acent observations in a time ser ies.