SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
Test your basic knowledge |
CFA Level2 Vocab
Start Test
Study First
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. The market for short-term debt instruments (one-year maturity or less).
Swaption
Money market
Financial analysis
Independent projects
2. A third party that is sought out by the target company's board to purchase the target in lieu of a hostile bidde .
Assignment of accounts receivable
Mature growth rate
White knight
Dividend displacement of earnings
3. A time series regressed on its own past values - in which the independent vari-able is a lagged value of the dependent variable.
Autoregressive (AR) model
Degree of confidence
Semivariance
Rate-of-return regulation
4. Behavior on the part of a firm that allows it to comply with the letter of the law but violate the spirit - significantly lessening the law's effects.
Creative response
Portfolio possibilities curve
Account format
Centralization permits economies of scale and allows a company to use some of its risks to offset other risks.
5. Costs that remain at the same level regardless of a company's level of production and sales.
Debt with warrants
Historical method
Fixed costs
Installment
6. A merger or acquisition that is to be paid for with cash; the cash for the merger might come from the acquiring company's existing assets or from a debt issue.
Warehouse receipt arrangement
Current assets - or liquid assets
Cash o£ fering
Discrete random variable
7. A permissible delivery procedure used by futures market participants - in which the long and short arrange a delivery pro-cedure other than the normal procedures stipu-lated by the futures exchange.
Exchange for physicals (EFP)
Working capital turnover
Payoff
Operations risk or operational risk
8. The differential of infor-mation between corporate insiders and outsiders regarding the company's performance and prospects. Managers typically have more informa-tion about the company's performance and prospects than owners and creditors.
Comprehensive income
Linear trend
synunetric information
Deep out of the money
9. Cannibalization occurs when an investment takes customers and sales away from another part of the company.
White knight
Cannibalization
Flip-in pill
Trailirig dividend yield
10. Observations of a variable over time.
Revolving credit agreements
Risk budgeting
Sarbanes-Oxley Act
Time-series data
11. A wholly-owned sub-sidiary of a company that is established to provide financing of the sales of the parent company.
Captive rmance subsidiary
Enhanced derivatives products companies (EDPC)
Up transition probability
Convenience yield
12. A measure of the expected annual cash flow from the operation of a real estate investment after all expenses but before taxes.
Before-tax cash flow
Poison pill
Proportionate consolidation
Efficiency
13. The quality of being relatively unaffected by a violation of assumptions.
Laddering strategy
Chart of accounts
Multiple
Robust
14. 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.
Exposure to foreign exchange risk
Cumulative relative frequency
Active portfolio
Time-series data
15. When parties agree to exchange only the net amount owed from one party to the other.
Weighted-average cost of capital (WACC)
Bull spread
Degree of total leverage
Netting
16. A type of interest rate swap in which the floating payment is set at the end of the period and the interest is paid at that same time.
Arrears swap
North
Tangible assets
Double taxation
17. The value of the U.S. dollar in terms of other currencies in the foreign exchange market.
Book value of equity (or book value)
Markowitz decision rule
Exchange rate
Balance-sheet-based aggregate accruals
18. The percentage of a market that a particular fi rm supplies; used as the primary measure of monopoly power.
Retail method
Market share test
Rule of 72
Friendly transaction
19. The sum of market value of common equity - book value of preferred equity - and face value of debt.
Total invested capital
Investment constraints
Foreign currency
Market timing
20. With reference to regression errors - errors that are correlated across observations.
Multi-step format
Default risk premium
Swap
Serially correlated
21. A contract that spans a number of accounting periods.
Regime
Long-term contract
Mark-ta-market
Current exchange rate
22. Analysts who work for investment management fi rms - trusts - a d bank trust depart-ments - and similar institutions.
Buy-side analysts
Residual dividend approach
Spurious correlation
Type II error
23. The process of systematically allocat-ing the cost of long-lived (tangible) assets to theperiods during which the assets are expected toprovide economic benefits.
Matrix pricing
Return on common equity (ROCE)
Capital asset pricing model (CAPM)
Depreciation
24. A measurement scale that sorts data into categories that are ordered (ranked) with respect to some characteristic.
Allowance for bad debts
Long-term equity anticipatory securities (LEAPS)
Cash-flow-statement-based accruals ratio
Ordinal scale
25. The concept that dividends paid now displace earnings in all future periods.
Portfolio selection/composition problem
Mispricing
Interval
Dividend displacement of earnings
26. Costs (e.g. - executives' salaries) that cannot be directly matched with the timing of rev-enues and which are thus expensed immediately.
Hmnan capital
Period costs
Stated rate (nominal rate or coupon rate)
Return on equity (ROE)
27. An extra return that compen-sates investors for expected inflation.
Hostile transaction
Inflation premium
Mode
Exercise or exercising the option
28. A balance sheet that does not show subtotals for current assets and current liabilities.
Unclassified balance sheet
Fixed asset turnover
Unearned revenue (deferred revenue)
Transaction exposure
29. The autocorrelation of the error term.
Error autocorrelation
Residual income method (or excess earnings method)
Stock purchase
Service period
30. A variation of a floating-rate note that has some type of unusual characteristic such as a leverage factor or in which the rate moves opposite to interest rates.
Valuation
Structured note
Agency costs
Defined-benefit pension plans
31. With reference to a sample - the mean of the absolute values of deviations from the sample mean.
Relative dispersion
Cash flow additivity principle
Mean absolute deviation
Residual autocorrelations
32. 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.
Measure of central tendency
Broker
Investment constraints
Safety stock
33. A forward contract calling for one party to make a fixed interest payment and the other to make an interest pay-ment at a rate to be determined at the contract expiration.
Daily settlement
Forward rate agreement (FRA)
Tree diagram
Floorlet
34. A perpetual annuity - or a set of never-ending level sequential cash flows - with the first cash flow occurring one period from now.
Perpetuity
Point of sale
Exports
Available-for-sale investments
35. An option in which the underlying is a bond; primarily traded in over-the-counter markets.
Operating cycle
Ex-dividend date
Bond option
Catalyst
36. With reference to fundamental factor models - the value of the attribute for an asset minus the average value of the attribute across all stocks - divided by the standard deviation of the attribute across all stocks.
Abnormal earnings
Standardized beta
Working capital management
Joint probability
37. Any test (or procedure) concerned with parameters or whose validity depends on assumptions concerning the population generat-ing the sample.
Parametric test
Statement of changes in shareholders' equity (state-ment of owners' equity)
Out-of-sample forecast errors
Venture capital investors
38. Profits lost from not having suffi-cient inventory on hand to satisfy demand.
Poison pill
Stock-out losses
Cost structure
Mean
39. 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
Versioning
Lessor
LIFO method
Compiled f'mancial statements
40. The amount that each unit sold contributes to covering fixed costs- that is - the difference between the price per unit and the variable cost per unit.
Residual loss
Per unit contribution margin
Total asset turnover
Capitalized cash flow model (method)
41. The study of how data can besummarized effectively.
Descriptive statistics
Optimizer
Continuous random variable
Active strategy
42. An activity ratio calculated as revenue divided by average total assets.
Degree of operating leverage (DOL)
Total asset turnover
Panel data
Backward integration
43. The amount at which an asset or liability is valued for tax purposes.
Tax base (tax basis)
Supernormal growth
Continuous time
Commodity futures
44. Assets less liabilities; the residual interest in the assets after subtracting the liabilities.
Equity
Relative strength (RSTR) indicators
Split-rate
Liruit up
45. The return that an investorearns during a specified holding period; a syn-onym for total return.
Holding period return
Downstream
Equity
Bayes' formula
46. An amount equal to saving minus investment.
New growth theory
Noncurrent assets
Dynamic hedging
Private sector surplus or deficit
47. Probabilities reflecting beliefs prior to the arrival of new information.
Interquartile range
Prior probabilities
Value at risk (VAR)
Sole proprietorship
48. Numbers produced by random number generators.
Macroeconomic factor
Dynamic hedging
Pseudo-random numbers
Multicollinearity
49. A transformation that involves sub-tracting the mean and dividing the result by the standard deviation.
Interquartile range
Standardizing
Price to cash flow
Antidilutive
50. A profitability ratio calcu-lated as net income divided by average sharehold-ers' equity.
Credit scoring model
Return on equity (ROE)
Stock options (stock option grants)
Fundamental beta