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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. Revenue that has been earned but not yet billed to customers as of the end of an accounting period.






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






3. Each component put option in a floor.






4. Earnings exclud-ing nonrecurring components.






5. Earnings per share divided by price; the reciprocal of the PIE ratio.






6. The difference between the yield on a bond and the yield on a default-free security - usu-ally a government note - of the same maturity. The yield spread is primarily determined by the mar-ket's perception of the credit risk on the bond.






7. Investing on the basis of dif-ferential expectations.






8. A measure of goodness-of-fit of a regres-sion that is adjusted for degrees of freedom and hence does not automatically increase when another independent variable is added to a regression.






9. Asset inflows not directly related to the ordi-nary activities of the business.






10. A model that specifies an asset's intrinsic value.






11. An agreement allowing the lessee to use some asset for a period of time; essentially a rental.






12. To sell the assets of a company - division - or subsidiary piecemeal - typically because of bank-ruptcy; the form of bankruptcy that allows for the orderly satisfaction of creditors' claims after which the company ceases to exist.






13. The set of rules used to select a sample.






14. 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.






15. A swaption that allows the holder to enter into a swap as the fixed-rate payer and floating-rate receiver.






16. The existence of an exact linear relation between two or more independent vari-ables or combinations of independent variables.






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






18. In statistics - a desirable property of esti-mators; an efficient estimator is the unbiased esti-mator with the smallest variance among unbiased estimators of the same parameter.






19. The present value of an investment's cash inflows (benefits) minus the present value of its cash outflows (costs).






20. Time thought of as advancing in extremely small increments.






21. A country that during its entire his-tory has borrowed more in the rest of the world than other countries have lent in it.






22. The mix of a company's variable costsand fixed costs.






23. A theory of economic growth based on the view that the growth of real GDP per person is temporary and that when it rises above subsistence level - a population explo-sion eventually brings it back to subsistence level.






24. Stan-dard errors of the estimated parameters of a regression that correct for the presence of het-eroskedasticity in the regression's error term.






25. Options that relate to investment deci-sions such as the option to time the start of a proj-ect - the option to adjust its scale - or the option to abandon a project that has begun.






26. With reference to regression errors - errors that are correlated across observations.






27. A profitability ratio calculated as (net income - preferred divi-dends) divided by average common equity; equal to the return on equity ratio when no preferred equity is outstanding.






28. Provision for a return of invest-ment - net of value appreciation.






29. 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






30. Factor models that combine features of more than one type of factor model.






31. Analysis that involves com-parisons across individuals in a group over a given time period or at a given point in time.






32. An option strategy that combines two bull or bear spreads and has three exercise prices.






33. The use of an inaccurate pricing model for a particular investment - or the improper use of the right model.






34. The minimum real wage rate needed to maintain life.






35. Huidity When receipts lag - creating pres-sure fmm the decreased available funds.






36. A measure of VAR equivalentto the analytical method bu t that refers to the use of delta to estimate the option's price sensitivity.






37. A company's chosen propor-tions of debt and equity.






38. Activities that are part of the day-to-day business functioning of an entity - such as selling inven tory and providing services.






39. The system of principles - policies - procedures - and clearly defined responsi-bilities and accountabilities used by stakeholders to overcome the conflicts of interest inherent in the corporate form.






40. Assets less liabilities; the residual interest in the assets after subtracting the liabilities.






41. A legal corporate entity whose shareholders are its members. The members of the exchange have the privilege of executing transactions directly on the exchange.






42. Risk for which investors demand com-pensation for bearing (e.g. - equity risk - company-specific factors - macroeconomic factors).






43. Sales price less disposition costs - amortized mortgage loan bal-ance - and capital gains taxes.






44. Is Derivatives in which the payoffs occur if a specific event occurs; generally referred to as options.






45. An inventory accounting method in which the sales value of an item is reduced by the gross margin to calculate the item's cost.






46. Uncertainty with respect to the quantity of goods and services that a company is able to sell and the price it is able to achieve; the risk related to the uncertainty of revenues.






47. The slope of the capital market line - indicating the market risk premium for each unit of market risk.






48. An exchange rate pegged at a value decided by the government or central bank and that blocks the unregulated forces of demand and supply by direct intervention in the foreign exchange market.






49. A method of account-ing in which combined companies were portrayed as if they had always operated as a single eco-nomic entity. Called pooling of interests under






50. A public document that provides the material facts concerning matters on which shareholders will vote.