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






2. The number of units pro-duced and sold at which the company's operating profit is zero (revenues = operating costs).






3. The process by which options and other derivatives are priced by treating investors as though they were risk neutral.






4. The cash flow that is real-ized because of a decision; the changes or incre-ments to cash flows resulting from a decision or action.






5. The particular value calculated from sam-ple observations using an estimator.






6. The probability that an asset's value moves up.






7. With reference to statistical inference - astatement about one or more populations.






8. Large industry groupings.






9. A hypothesis concern-ing pricing behavior that holds that even though there are only a few firms in an industry - they are forced to price their products more or less com-petitively because of the ease of entry by outsiders. The key aspect of a conte






10. A quantity computed from or used to describe a sample.






11. Analysis that shows the changes in key financial quantities that result from given (economic) events - such as the loss of customers - the loss of a supply source - or a catastrophic event; a risk management technique involving examina-tion of the pe






12. A process used in a deliverable forward contract in which the long pays the agreed-upon price to the short - which in turn delivers the underlying asset to the long.






13. The number of indepen-dent observations used.






14. A method of estimating VAR that uses data from the returns of the portfolio over a recent past period and compiles this data in the form of a histogram.






15. Systems that capture transaction data at the physical location in which the sale is made.






16. The difference between the fixed rate on an interest rate swap and the rate on a Trea-sury note with equivalent maturity; it reflects the general level of credit risk in the market.






17. Options that are far in-the-money.






18. An observation drawn from a uni-form distribution.






19. Assets used as benchmarks when applying the method of com parables to value an asset.






20. The amount by which a unit of currency will grow in a year with interest on inter-est included.






21. The sum of market value of common equity - book value of preferred equity - and face value of debt.






22. A procedure used in certain deriva-tive transactions that specifies that the long and short parties engage in the equivalent cash value of a delivery transaction.






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






24. An experiment that can produce one of two outcomes.






25. A bar chart of data that have been grouped into a frequency distribution.






26. Taken as a deduction in arriving at net income.






27. The cash flow available to a company's common shareholders after all operat-ing expenses - interest - and principal payments have been made - and necessary investments in working and fixed capital have been made.






28. An estimate of the country spread (country equity premium) for a develop-ing nation that is based on a comparison of bonds yields in country being analyzed and a developed country. The sovereign yield spread is the differ-ence between a government bo






29. A solvency ratio measuring the number of times interest and lease payments are covered by operating income - calculated as (EBIT + lease payments) divided by (interest payments + lease payments).






30. In reference to assets - the amount paid to purchase an asset - including any costs of acquisition and! or preparation; with reference to liabilities - the amount of proceeds received in exchange in issuing the liability.






31. Method used to estimate the overall capitalization rate by dividing the sale price of a comparable income property into the net operating income.






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






33. With reference to a time series - the underly-ing model generating the times series.






34. The sensitivity of the option price to the risk-free rate.






35. A quantity whose future outcomes are uncertain.






36. The use of inven-tory as collateral for a loan; similar to a trust receipt arrangement except there is a third party (i.e. - a warehouse company) that supervises the inventory.






37. Company growth in output or sales that is achieved by buying the necessary resources externally (i.e. - achieved through mergers and acquisitions) .






38. The market value of debt and equity.






39. A trend in which the dependent vari-able changes at a constant rate with time.






40. With reference to assets - the amount of cash or cash equivalents that could currently be obtained by sell ing the asset i an orderly disposal; with reference to lia-bilities - the undiscounted amount of cash or cash equivalents expected to be paid t






41. Accounting in which some income items are reported as part of stockholders' equity rather than as gains and losses on the income statement; certain items of comprehensive income bypass the income statement and appear as direct adjustments to sharehol






42. The risk associated with the pos-sibility that a payment due at a later date will not be made.






43. An investment decision rule that accepts projects or investments for which the IRR is greater than the opportunity cost of capital.






44. An association or relationship between variables that cannot be graphed as a straight line.






45. An indicator of profitability - calculated as net income divided by revenue; indicates how much of each dollar of revenues is left after all costs and expenses.






46. An approach to investment analysis and security selection.






47. The rule that - on the average - with no change in technology - a 1 percent increase in capital per hour of labor brings a 1/3 percent increase in labor productivity.






48. Depositary Receipt A negotiable certifi -cate issued by a depositary bank that represen ts ownersh ip in a non-U .S. company's deposi ted equity (i.e. - equity held in custody by the deposi-tary bank in the company's home market).






49. The mix of debt and equity that a company uses to finance its business; a company's specific mixture of long-term financing.






50. An investment where the investor exerts control over the investee - typically by having a greater than 50 percent ownership in the investee.