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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. Costs borne by management to assure owners that they are working in the own-ers' best interest (e.g. - implicit cost of non-compete agreements).






2. A quantity - calculated based on a sam-ple - whose value is the basis for deciding whether or not to reject the null hypothesis.






3. The proportional annual benefit that results from making an investment.






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






5. A standardized measure of systematic risk based upon an asset's covariance with the market portfolio.






6. Total assets minus total liabilities.

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7. The risk associated with accounting standards that vary from country to country or with any uncertainty about how certain transac-tions should be recorded.






8. Numbers produced by random number generators.






9. Amounts customers owe the company for products that have been sold as well as amounts that may be due from suppliers (such as for returns of merchandise).






10. The risk of a change in value between the transaction date and the settlement date of an asset or liability denominated in a for-eign currency.






11. 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.






12. The strongest form of short-term bank borrowing facilities; they are in effect for multiple years (e.g. - 3-5 years) and may have optional medium-term loan features.






13. 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






14. The amount of income earned during a period per share of common stock.






15. A merger involving companies inthe same line of business - usually as competitors.






16. A country that is borrowing more from the rest of the world than it is lending to it.






17. The hypothesis to be tested.






18. With reference to regression - the set of variables included in the regression and the regression equation's functional form.






19. Correlation between adj acent observations in a time ser ies.






20. The possession of monopoly power in the relevant market and the willful acquisition or maintenance of that power - as distinguished from growth or development as a consequence of a superior product - business acumen - or historical accident.






21. The relationship between the option price and the underlying price - which reflects the sensi-tivity of the price of the option to changes in the price of the underlying.






22. A sample measure of the degree of a distribution's peakedness in excess of the normal distribution's peakedness.






23. The evaluation of risk-adjusted performance; the evaluation of invest-ment skill.






24. A type of subsidiary engaged in derivatives trans-actions that is separated from the parent company in order to have a higher credit rating than the parent company.






25. Income as reported on the income statement - in accordance with prevailing account-ing standards - before the provisions for income tax expense.






26. An activity ratio equal to the number of days in the period divided by inventory turnover over the period.






27. An attempt to acquire a com-pany against the wishes of the target's managers.






28. A capital rationing environment assumes that the company has a fixed amount of funds to invest.






29. Instruments that payinterest as the difference between the amountborrowed and the amount paid back.






30. An offset to revenue reflecting any cash refunds - credits on account - and discounts from sales prices given to cus-tomers who purchased defective or unsatisfactory items.






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






32. A swap in which one party agrees to pay the total return on a security. Often used as a credit derivative - in which the underlying is a bond.






33. A portfolio offering the highest expected return for a given level of risk as mea-sured by variance or standard deviation of return.






34. A theory of economic growth that proposes that real CDP per person grows because technological change induces a level of saving and investment that makes capital per hour oflabor grow.






35. 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.






36. A method for estimating a company's before-tax cost of debt based upon the yield on comparably rated bonds for maturities that closely match that of the company's existing debt.






37. The pro-portion of the ownership of a subsidiary not held by the parent (controlling) company.






38. Independent projects are projects whose cash flows are independent ofeach other.






39. The value of an asset given a hypothetically complete understand-ing of the asset's investment characteristics; the value obtained if an option is exercised based on current conditions.






40. The posi tive square root of tar-get semivar·ance.






41. The differ-ence between reported net income on an accrual basis and the cash flows from operating and investing activities compared to the average net operating assets over the period.






42. Resources controlled by an enterprise as a result of past events and from which future eco-nomic benefits to the enterprise are expected to flow.






43. A scheme of measuring differ-ences. The four types of measurement scales are nominal - ordinal - interval - and ratio.






44. A result in probability theory stating that inconsistent probabilities create profit opportunities.






45. A stage of growth in which a company typically enjoys rapidly expanding markets - high profit margins - and an abnormally high growth rate in earnings per share.






46. The time between settlement dates.






47. Quantiles that divide a distribution into four equal parts.






48. Quantiles that divide a distribution into 100 equal parts.






49. An approach to decomposing return on investment - e.g. - return on equity - as the product of other financial ratios.






50. A method of accounting for abusiness combination where the acquiring com-pany allocates the purchase price to each assetacquired and liability assumed at fair value. If thepurchase price exceeds the allocation - the excessis recorded as goodwill.