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






2. The actual amount paid for income taxes in the period; not a provision - but the actual cash outflow.






3. A commercial imple-mentation of the residual income concept; the computation of EVA® is the net operating profit after taxes minus the cost of capital - where these inputs are adjusted for a number of items.






4. The date on which the parties to a swap make payments.






5. The concept that dividends paid now displace earnings in all future periods.






6. The risk that a company will suffer an extended diminution in market value relative to other companies in the same industry due to a demonstrated lack of concern for environmental - social - and governance risk factors.






7. Activities related to obtaining or repaying capital to be used in the business (e.g. - equity and long-term debt).






8. Unsecured short-term corporate debt that is characterized by a single payment at maturity.






9. 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.






10. A procedure used primarily in futures markets in which the parties to a contract settle the amount owed daily. Also known as the daily settlement.






11. A wholly-owned sub-sidiary of a company that is established to provide financing of the sales of the parent company.






12. The probability of an event given (conditioned on) another event.






13. A comparison of revenues with working capital to produce a measure that shows how efficiently working capital is employed.






14. The number of shares that would beoutstanding if all potentially dilutive claims oncommon shares (e.g. - convertible debt - convert-ible preferred stock - and employee stock options)were exercised.






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






16. A measure of central tendency computed by taking the nth root of the product of n non-negative values.






17. The management of a company's short-term assets (such as inventory) and short-term liabilities (such as money owed to suppliers) .






18. An option in which the holder has the right to make an unknown interest payment and receive a known interest payment.






19. The intercept and slope coefficient(s) of a regression.






20. With respect to hypothesis testing - the rule according to which the null hypothesis will be rejected or not rejected; involves the compari-son of the test statistic to rejection point(s).






21. A beta that is based at least in part on fundamental data for a company.






22. A poison pill takeover defense that gives target company shareholders the right to purchase shares of the acquirer at a significant discount to the market price - which has the effect of causing dilution to all existing acquiring com-pany shareholder






23. In the context of the Treynor-Black model - the portfolio formed by mixing analyzed stocks of perceived nonzero alpha values. This portfolio is ultimately mixed with the passive mar-ket index portfolio.






24. Next twelve months P/E: current market price divided by an estimated next twelve months EPS.






25. A finite set of level sequential cash flows.






26. Generally - a synonym for revenue; 'sales' is generally understood to refer to the sale of goods - whereas 'revenue' is understood to include the sale of goods or services.






27. 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.






28. The margin requirement on any day other than the first day of a transaction.






29. A system that allows individual units within an organization to manage risk. Decentralization results in duplication ofeffort but has the advantage of having people closer to the risk be more d irectly involved in its management.






30. All members of a specified group.






31. A liability account for money that has been collected for goods or services that have not yet been delivered; payment received in advance of providing a good or servIce.






32. A graphical depic-tion of a company's investment opportunities ordered from highest to lowest expected return. A company's optimal capital budget is found where the investment opportunity schedule inter-sects with the company's marginal cost of capit






33. Agency costs that are incurred despite adequate monitoring and bonding of management.






34. The fair value of the estimated costs to be incurred at the end of a tangible asset's service life. The fair value of the liability is determined on the basis of discounted cash flows.






35. The difference between current assets and current liabilities.






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






37. In accounting contexts - cash on hand (e.g. - petty cash and cash not yet deposited to the bank) and demand deposits held in banks and similar accounts that can be used in payment of obligations.






38. A merger involving the pur-chase of a target that is farther along the value or production chain; for example - to acquire a distributor.






39. A theory of regulatory behavior that predicts that regulators will eventually be cap-tured by special interests of the industry being regulated.






40. A policy regime is one that selects a target path for the exchange rate with interven-tion in the foreign exchange market to achieve that path.






41. The quoted interest rate per period; the stated annual interest rate divided by the number of compounding periods per year.






42. The fixed price or rate at which the transaction scheduled to occur at the expiration of a forward contract will take place. This price is agreed on at the initiation date of the contract.






43. Shareholders' equity (total assets minus total liabilities) minus the value of preferred stock; common shareholders' equity.






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






45. In the context of customer receipts - the amount of money that is in transit between pay-ments made by customers and the funds that are usable by the company.






46. A profitability ratio calcu-lated as net income divided by average sharehold-ers' equity.






47. A rule explaining the uncon-ditional probability of an event in terms of proba-bilities of the event conditional on mutually exclusive and exhaustive scenarios.






48. The price multiple for a stock assumed to hold at a stated future time.






49. Depreciatiolil methods that allocate a relatively large proportion of the cost of an asset to the early years of the asset's useful life.






50. Plan in which the company promises to pay a certain annual amount (defined benefit) to the employee after retirement. The company bears the investment risk of the plan assets .