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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. A specifi-cation of how 'value' is to be understood in the context of a specific valuation.






2. A ratio of an ending price over a beginning price; it is equal to 1 plus the holding period return on the asset.






3. An option strategy that is equiva-lent to a short butterfly spread.






4. A financial statement that reconciles the beginning-of-period and end-of-period balance sheet values of shareholders' equity; provides information about all factors affecting shareholders' equity.

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5. The allocation of funds to rela-tively long-range projects or investments.






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






7. The rule that the joint probability of events A and B equals the probability of A given B times the probability of B.






8. The investigation of issues relating to the accuracy of reported accounting results as reflections of economic per-formance; quality of earnings analysis is broadly understood to include not only earnings manage-ment - but also balance sheet manageme






9. The time remaining in the life of a derivative - typically expressed in years.






10. The principle that the approximate num-ber of years necessary for an investment to double is 72 divided by the stated interest rate.






11. When settling a contract - the risk that one party could be in the process of paying the counterparty while the counterparty is declar-ing bankruptcy.






12. Each component call option in a cap.






13. Amounts owed to the company from parties other than customers.






14. The period benefited~y the employee's service - usually th e period between the grant date and the vesting date.






15. A model of intrinsic value that views the value of an asset as the present value of the asset's expected future cash flows.






16. Common-size analysis using only one reporting period or one base financial state-ment; fo r example - an income statement in which all items are stated as percentages of sales.






17. The portion of the minimum-variance frontier beginning with the global mmlmum-variance portfolio and continuing above it; the graph of the set of portfolios offering the maximum expected return for their level of variance of return.






18. Net operating income less debt service and less taxes payable on income from operations.






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






20. Amounts owed by a business to credi-tors as a result of borrowings that are evidenced by (short-term) loan agreements. n-Period moving average The average of the current and immediately prior n - 1 values of a time series.






21. The probability that an asset's value moves down in a model of asset price dynamics.






22. A fUl !lction giving the probability of joint occurrences of values of stated random variables.






23. An act passed by the U.S. Congress in 1934 that created the Securi-ties and Exchange Commission (SEC) - gave the SEC authority over all aspects of the securities industry - and empowered the SEC to require peri-odic reporting by companies with public






24. Costs borne by owners to moni tor the management of the company (e.g. - board of director expenses).






25. The condition in futures markets in which futures prices are lower than expected spot prices.






26. The buyer of a derivative contract. Also refers to the position of owning a derivative.






27. A country's record of international trading - borrowing - and lending.






28. The process of valuing long-lived assets at fair value - rather than at cost less accumulated depreciation. Any resulting profit or loss is either reported on the income statement and/or through equity under revaluation surplus.






29. Hirschman Index A measure of rna ket concentration that is calculated by summing the squared mar et shares for competing companies in an industry; high HHI readings or mergers that would result in large HHI increases are more likely to result in regu






30. Aka also enterprise risk management.






31. 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.






32. Quantiles that divide a distribution into five equal parts.






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






34. 1) The simultaneous purchase of an undervalued asset or portfolio and sale of an over-valued but equivalent asset or portfolio - in order to obtain a riskless profit on the price differential. Taking advantage of a market inefficiency in a risk-free






35. Valuation indi-cators that compare a stock's performance during a period either to its own past performance or to the performance of some group of stocks.






36. The status of a company in the sense of whether it is assumed to be a going con-cern or not.






37. A solvency ratio calculated as total debt divided by total debt plus total share-holders ' equi ty.






38. The science of describing - analyzing - and drawing conclusions from data; also - a collection of numerical data.






39. European option An option contract that can only be exercised on its expiration date.






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






41. The unlevered beta; reflects the business risk of the assets; the asset's systematic risk.






42. A method of identifying the basic elements of the overall capitalization rate.






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






44. Not symmetrical.






45. The ratio of the market value of debt and equity to the replacement cost of total assets.

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46. A merger or acquisition that is to be paid for with cash - securities - or some combina-tion of the two.






47. An updated probability that reflects or comes after new information.






48. In the context of inventory management - the need for inventory as part of the routine production-sales cycle.






49. Observations over individual units at a point in time - as opposed to time-series data.






50. A swap in which the floating payments have a lower limit.