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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. American Free Trade Agreement An agree-ment - which became effective on January 1 - 1994 - to eliminate all barriers to international trade between the United States - Canada - and Mexico after a 15-year phasing-in period.






2. The ratio of a stock's market price to some m asure of va ue per share.






3. A swap in which one party agrees to pay the total return on a security. Often used as a credit derivative - in which the underlying is a bond.






4. In probability - with reference to an event 5 - the event that 5 does not occur; in eco-nomics - a good that is used in conjunction with another good.






5. A method of valuing prop-erty based on site value plus current construction costs less accrued depreciation.






6. The hypothesis to be tested.






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






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






9. The return that aninvestor earns during a specified holding period;holding period re turn with reference to a fixed-income instuument.






10. The variable whose variationabout its mean is to be explained by the regres-sion; the left-hand-side variable in a regressionequation.






11. An option strategy involving the purchase of two puts and one call.






12. Income rate that reflects the relationship between equity income and equity capital.






13. A trader who offers to buy or sell futures contracts - holding the position for only a brief period of time. Scalpers attempt to profit by buy-ing at the bid price and selling at the higher ask price.






14. An event or piece of information that causes the marketplace to re-evaluate the prospects of a company.






15. The risk associated with operating earnings. Operating earnings are uncertain because total revenues and many of the expendi-tures contributed to produce those revenues are uncertain.






16. The theory that managers take into account how their actions might be inter-preted by outsiders and thus order their prefer-ences for various forms of corporate financing. Forms of financing that are least visible to out-siders (e.g. - internally gen






17. The probability of an event estimated as a relative frequency of occurrence.






18. A financial statement that provides information about a company's prof-itability over a stated period of time.






19. A swap in which the underlying is an interest rate. Can be viewed as a currency swap in which both currencies are the same and can be created as a combination of currency swaps.






20. A theory of economic growth that proposes that real CDP per person grows because technological change induces a level of saving and investment that makes capital per hour oflabor grow.






21. The naturalloga-rithm of 1 plus the holding period return - or equivalently - the natural logarithm of the ending price over the beginning price.






22. Analysts who work for investment management fi rms - trusts - a d bank trust depart-ments - and similar institutions.






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






24. The procedure of drawing a sample to satisfy the definition of a simple ran-dom sample.






25. The process of selecting - evaluat-ing - and interpreting financial data in order to formulate an assessment of a company's present and future financial condition and performance.






26. With reference to the cash flow statement - a format for the presentation of the statement in which cash flow from operat-ing activities is shown as operating cash receipts less operating cash disburseme ts.






27. Approach that values a private company based on the values of the underlying assets of the entity less the value of any related liabilities.






28. The competitive strategy of being the lowest cost producer while offering products comparable to those of other firms - so that prod-ucts can be priced at or near the industry average.






29. A floating-rate note or bond in which the coupon is adjusted to move opposite to a benchmark interest rate.






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






31. The graphical representation of a model of asset price dynamics in which - at each period - the asset moves up wi t probability p or down with probability (I - p).






32. The value of the U.S. dollar in terms of other currencies in the foreign exchange market.






33. Observations on characteristic(s) of the same observational unit through time.






34. 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.






35. The probability of the joint occur-rence of stated even ts.






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






37. Selling a product in slightly altered forms to different groups of consumers.






38. 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.






39. The proportional annual benefit that results from making an investment.






40. The date that employees can first exer-cise stock options; vesting can be immediate or over a future period.






41. The lowest possible value of an option.






42. The preference some investors have for shares that exhibit certain characteristics.






43. A type of qualitative variable that takes on a value of 1 if a particular condition is true and 0 if that condition is false.






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






45. CreaLing a contrac t with standard and generally accepted terms - which makes it moreacceptable to a broader group of participants.






46. An approach to valuation that involves using a price multiple to evaluate whether an asset is relatively fairly valued - rela-tively undervalued - or relatively overvalued when compared to a benchmark value of the multiple.






47. A standardized measure of systematic risk based upon an asset's covariance with the market portfolio.






48. Estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.






49. The hypothesis that higher debt levels discipline managers by forcing them to make fixed debt service payments and by reducing the company's free cash flow.






50. The estimated gross amount of money that could be realized from the liquidation sale of an asset or assets - given a rea-sonable amount of time to find a purchaser or purchasers.