Test your basic knowledge |

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. Costs of inven tories including costs of purchase - costs of conversion - other costs to bring the inventories to their present location and condition - and the allocated portion of) fixed production overhead costs.






2. The expected value of a stated event given that another event has occurred.






3. A loss in value caused bychanges in price levels. Monetary assets experi-ence purchasing power losses during periods ofinflation.






4. A measure of the expected annual cash flow from the operation of a real estate investment after all expenses but before taxes.






5. The unlevered beta; reflects the business risk of the assets; the asset's systematic risk.






6. Activities which are associated with the acquisition and disposal of property - plant - and equipment; intangible assets; other long-term assets; and both long-term and short-term investments in the equity and debt (bonds and loans) issued by other c






7. The rate of return from a cash-and-carry transaction implied by the futures price relative to the spot price.






8. 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.






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






10. Ratios that measure a company's ability to meet its long-term obligations.






11. Under U.S. GAAP - a mea-sure used in estimating a defined-benefit pension plan's liabilities - defined as the 'actuarial present value of vested benefits.'






12. The last in - first out - method of accounting for inventory - which matches sales against the costs of items of inventory in the reverse order the items were placed in inventory (i.e. - inventory produced or acquired last are assumed to be sold firs






13. Desired investment outcomes; includes risk objectives and return objectives.






14. An international organi-zation that places greater obligations on its mem-ber countries to observe the GATT rules.






15. A sample measure of the degree of dispersion of a distribution - calculated by dividing the sum of the squared deviations from the sam-ple mean by the sample size minus 1.






16. Dummy variables used as dependent variables rather than as inde-pendent variables.






17. An electronic payment system used widely in Europe and Japan.






18. A liquidity ratio calculated as current assets divided by current liabilities.






19. Corporate earnings are taxed twice when paid out as dividends. First - corporate earn-ings are taxed regardless of whether they will be distributed as dividends or retained at the G-13 corporate level - and second - dividends are taxed again at the i






20. 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.






21. A loan in which the interest rate is reset at least once after the starting date.






22. A combination of a European call and a risk-free bond that matures on the option expiration day and has a face value equal to the exer-cise price of the call.






23. The P/E to-growth ratio - calculated as the stock's PI E divided by the expected earnings growth rate.






24. The buyer of a derivative contract. Also refers to the position of owning a derivative.






25. The differences between actual and predicted value of time series outside the sample period used to fit the model.






26. A form of restructuring that involves the creation of a new legal entity and the sale of equity in it to outsiders.






27. Carlo simulation method An approach to estimating a probability distribution of outcomes to examine what might happen if particular risks are faced. This method is widely used in the sci-ences as well as in business to study a variety of problems.






28. Financial instru-ments that an entity chooses to measure at fairvalue per lAS 39 or SFAS 159. Generally - the elec-tion to use the fair value option is irrevocable.






29. The condition in a financial mar-ket in which two equivalent financial instruments or combinations of financial instruments can sell for only one price. Equivalent to the principle that no arbitrage opportunities are possible.






30. The use of accounts receivable as collateral for a loan.






31. 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.






32. Describes a distribution that is less peaked than the normal distribution.






33. A quantity computed from or used to describe a sample of data.






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






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






36. A trade in two closely related stocks that involves buying the relatively undervalued stock and selling short the relatively overvalued stock.






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






38. The process of obtaining a sample.






39. A potential business combina-tion that is endorsed by the managers of both companies.






40. A swap in which the underlying is a commodity such as oil - gold - or an agricultural product.






41. In reference to short-term cash man-agement - an investment strategy characterized by monitoring and attempting to capitalize on mar-ket conditions to optimize the risk and return relationship of short-term investments.






42. Promises by the company to pay benefits in the future - other than pension benefits - such as life insurance premiums and all or part of health care insurance for its retirees.






43. A test in which the null hypothesis is rejected only if the evidence indicates that the population parameter is greater than (smaller than) eo- The alternative hypothesis also has one side.






44. The most common type of commun-size analysis - ill which the accounts in a given period are compared to a benchmark item in that same year.






45. Controlling additional property throughreinvestment - refinancing - and exchanging.






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






47. 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






48. An equation describing the expected return on any asset (or portfolio) as a linear function of its beta relative to the market portfolio.






49. 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.






50. Estimates of items such as the useful lives of assets - warranty costs - and the amount of uncollectible receivables.