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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. The annual percentage change in real CDP.






2. The number of indepen-dent observations used.






3. A probability drawing on per-sonal or subjective judgment.






4. The risk associated with the conversion of foreign financial statements into domestic currency.






5. A condition in the futures markets in which the benefits of holding an asset exceed the costs - leaving the futures price less than the spot price.






6. The principles governing equivalence relationships between cash flows with different dates.






7. 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.






8. A solvency ratio calculated as total debt divided by total assets.






9. A model of stock valuation that views intrinsic value of stock as the sum of book value per share plus the present value of the stock's expected future residual income per share.






10. The expected return in excess of the risk-free rate for a portfolio with a sensitivity of 1 to one factor and a sensitivity of 0 to all other factors.






11. A distribution that specifies the probabilities for a single random variable.






12. The principle that dol-lar amounts indexed at the same point in time are additive.






13. A breakdown of accounts into cate-gories of days outstanding.






14. A measure of dispersion relat-ing to a population - calculated as the mean of the squared deviations around the population mean.






15. A bank commitment to extend credit up to a pre-specified amount; the commitment is considered a short-term liability and is usually in effect for 364 days (one day short of a full year).






16. ID) With respect to random variables - the property of ran-dom variables that are independent of each otherbut follow the identical probability distribution.






17. The autocorrelation of the error term.






18. A trader who typically holds posi-tions open overnight.






19. The observation that P /Es tend to be high on depressed EPS at the bottom of a business cycle - and tend to be low on unusually high EPS at the top of a business cycle.






20. A pre-offer takeover defense mech-anism involving the corporate charter (e.g. - stag-gered boards of directors and supermajority provisions) .






21. When a bankrupt company is allowed to enforce contracts that are favorable to it while walking away from contracts that are unfa-vorable to it.






22. The most recent quarterly dividend multiplied by four.






23. Cash and investments (specifi-cally cash - cash equivalents - and short-term investments) .






24. 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.






25. Earnings for a given time period - minus a deduction for common shareholders' opportunity cost in generating the earnings.






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






27. A rule explaining the expected value of a random vari-able in terms of expected values of the random variable conditional on mutually exclusive and exhaustive scenarios.






28. A transaction in which a company buys back its own shares. Unlike stock dividends and stock splits - share repurchases use corporate cash.






29. A quoting convention that annualizes - on a 360-day year - the discount as a percentage of face value.






30. A list of accounts used in an entity's accounting system.






31. Selling a product in slightly altered forms to different groups of consumers.






32. Heightened uncertainty regarding a company's ability to meet its various obligations because of lower or negative earnings.






33. The evaluation of credit risk; the evaluation of the creditworthiness of a borrower o r counterpar ty.






34. An activity ratio equal to rev-enue divided by average receivables.






35. Unexpected earnings divided by the standard deviation of analysts' earnings forecasts.






36. A pre-offer takeover defense mecha-nism that gives target company bondholders the right to sell their bonds back to the target at a pre-specified redemption price - typically at or above par value; this defense increases the need for cash and raises






37. A variation of the market approach; considers actual transactions in the stock of the subject private company.






38. The competitive strategy of offeringunique products or services along some dimen-sions that are widely valued by buyers so that thefirm can command premium prices.






39. Costs that fluctuate with the level of production and sales.






40. Trading ex-dividend refers to shares that no longer carry the right to the next dividend payment.






41. A principle stating that the pr:obability that A or B occurs (both occur) equals he probabili ty thab A occ rs - plus the probabir ty tha~ B occurs - minus the probabil-ity that both A and B occur.






42. The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or groups of assets.






43. A merger in which the company being purchased becomes a subsidiary of the purchaser.






44. An approach to trading that uses pairs of closely re ated stocks - buying the relatively undervalued stock and selling short the relatively overvalued stock.






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






46. 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






47. A measure of the sensitivity of a bond's yield to a general measure of bond yields in the market that is used to refine the hedge ratio.






48. A condition in the futures markets in which the price at which a transaction would be made is at or beyond the price limits.






49. The estimation of an unknown value on the basis of two known values that bracket it - using a straight line between the two known values.






50. With respect to revenue recognition - a method that s ecifies that the portion of the total profit of the sale that . s recognized in each pe riod is deter-mined by the percentage of the total sales price for which the seller has received cash.