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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. Items that affect comprehensive income but which bypass the income statement.






2. The ratio of the percentage change in net income to the percentage change in units sold; the sensitivity of the cash flows to owners to changes in the number of units pro-duced and sold.






3. 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.






4. A valuation that sums the estimated values of each of a company's busi-nesses as if each business were an independent going concern.






5. The procedure of drawing a sample to satisfy the definition of a simple ran-dom sample.






6. An offset to property - plant - and equipment (PPE) reflecting the amount of the cost of PPE that has been allocated to current and previous accounting periods.






7. A finance perspective on capital markets that deals with the relationship of price to intrinsic value. The traditional efficient mar-kets formulation asserts that an asset's price is the best available estimate of its intrinsic value. The rational ef






8. A synonym for robust standard errors.






9. The market price of an asset or lia-bility that trades regularly.






10. Accounting method in which the only relevant transactions for the financial statements are those that involve cash.






11. A mean computed after assigning a stated percent of the lowest values equal to one specified low value - and a stated percent of the highest values equal to one specified high value.






12. An arrangement whereby a customer authorizes a debit to a demand account; typically used by companies to collect routine pay-ments for services.






13. Serial correlation in which a positive error for one observation increases the chance of a positive error for another observation - and a negative error for one observation increases the chance of a negative error for another observation.






14. A balance sheet liability that arises when a deficit amount is paid for income taxes relative to accounting profit. The taxable income is less than the accounting profit and income tax payable is less than tax expense. The company expects to eliminat






15. ROA) A prof-itability ratio calculated as operating income divided by average total assets.






16. 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.






17. Momentum indicators based on price.






18. CAPM An adaptation of the CAPM that adds to the CAPM a premium for small size and company-specific risk.






19. A record of foreign investment in a country minus its investment abroad.






20. A model for pricing options in which the underlying price can move to only one of two possible new prices.






21. A specialized computer program or a spreadsheet that solves for the portfolio weights that will result in the lowest risk for a specified level of expected return.






22. An exchange rate is deter-mined by demand and supply with no direct inter-vention in the foreign exchange market by the central bank.






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






24. The ratio of P I E-ta-growt - calculated as the stock's P /.E divided by the expected earnings growth rate in percent.






25. A method of presentation of accounting transactions in which effects on assets appear at the left and effects on liabilities and equity appear at the right of a central dividing line; also known as T-account format.






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






27. The duration without dividing by 1 plus the bond's yield to maturity. The term - named for one of the economists who first derived it - is used to distinguish the calculation from mod-ified duration. See also modified duration.






28. With reference to the presen-tation of expenses in an income statement - the grouping together of expenses serving the same function - e.g. - all items that are costs of good sold.






29. The number of shares that target stockholders are to receive in exchange for each of their shares in the target company.






30. A European-style option with a value at maturity equal to the difference between the stock price at maturity and the average stock price during the life of the option - or $0 - whichever is greater.






31. The cost of debt financing to a com-pany - such as when it issues a bond or takes out abank loan.






32. The owners' remaining claim on the company's assets after the liabilities are deducted.






33. The currency of the country where a company is located.






34. An option in which the underlying is a bond; primarily traded in over-the-counter markets.






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






36. An estimate of the equity risk pre-mium that is based upon estimates provided by a panel of finance experts.






37. The business of acting as agents for buy-ers or sellers - usually in return for commissions.






38. The positive square root of the sample variance.






39. The slope coefficients in a multiple regression.






40. A transaction between two affiliates - an investor company and an associate company such that the associate company records a profit on its income statement. An example is a sale of inven-tory by the associate to the investor company.






41. A dividend yield based on the anticipated dividend during the next 12 months.






42. A measure of th e yield on the undel~ ing bond of a futures contract implied by pricing it as though the underlying will be delivered at the futures expiration.






43. The risk that environmental - social - or governance risk fac tors will result in significant costs or other losses to a company and its share-holders; the risk arising from a company's obliga-tion to meet required payments under its financ-ing agree






44. In accounting contexts - cash on hand (e.g. - petty cash and cash not yet deposited to the bank) and demand deposits held in banks and similar accounts that can be used in payment of obligations.






45. The setting of overall policies and standards in risk management






46. A test that is not concerned with a parameter - or that makes minimal assumptions about the population from which a sam Ie comes.






47. Forecasted dividends per share over the next year divided by current stock price.






48. A distribution that specifies the probabilities of a random variable's possible outcomes.






49. Lack of bias. A desirable property of estimators - an unbiased estimator is one whose expected value (the mean of its sampling distri-bution) equals the parameter it is intended to estimate.






50. 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.