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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 price received to sell an asset or trans-fer a liability.






2. A company's operating profit with adjustments to normalize the effects of capital structure.






3. The amount the company estimates that it can sell the asset for at the end of its useful life.






4. A function that specifies the probability that the random variable takes on a specific value.






5. A tool that calculates the contri-bution to real CDP growth of each of its sources.






6. Agency costs that are incurred despite adequate monitoring and bonding of management.






7. Not symmetrical.






8. The quality of being relatively unaffected by a violation of assumptions.






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






10. A type of finance lease - from a lessor perspective - where the present value of the lease payments (lease receivable) equals the carry-ing value of the leased asset. The revenues earned by the lessor are financing in nature.


11. The probability of an event given (conditioned on) another event.






12. The time between settlement dates.






13. The amount that each unit sold contributes to covering fixed costs- that is - the difference between the price per unit and the variable cost per unit.






14. The graph of the set of portfolios that have minimum variance for their level of expected return.






15. A combination of interest rate put options designed to hedge a lender against lower rates on a floating-rate loan.






16. Computer-generated sensitivity or sce-nario analysis that is based on probability models fo r the factors that drive outcomes.






17. Observations of a variable over time.






18. 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.






19. The standard deviation of active returns.






20. An arrangement whereby someone - an agent - acts on behalf of another per-son - the principal.






21. A varia-tion ofVAR that reflects credit risk.






22. Tax expenses that have been recognized and recorded on a company's income statement but which have not yet been paid.






23. A forward contract calling for one party to make a fixed interest payment and the other to make an interest pay-ment at a rate to be determined at the contract expiration.






24. Cannibalization occurs when an investment takes customers and sales away from another part of the company.






25. A transformation that subtracts the value of the time series in period t - 1 from its value in period t.






26. 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).






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






28. A quantitative measure that specifies where data are centered.






29. The unsold units of product on hand.






30. The statistical measure that indicates the peakedness of a distribution.






31. With reference to cash flow statements - a format for the presenta-tion of the statement which - in the operating cash flow section - begins with net income then shows additions and subtractions to arrive at operatingcash flow.






32. A forecasting approach that involves aggregating the individual company forecasts of analysts into industry fore-casts - and finally into macroeconomic forecasts.






33. Valuation approach that values an asset based on pricing multiples from sales of assets viewed as similar to the subject asset.






34. A trader holding a position open some-what longer than a scalper but closing all posi-tions at the end of the day.






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






36. With reference to time-series mod-els - a model in which the growth rate of the time series as a function of time is constant.






37. In reference to assets - the amount paid to purchase an asset - including any costs of acquisition and! or preparation; with reference to liabilities - the amount of proceeds received in exchange in issuing the liability.






38. The actual value of a variable minus its pre-dicted (or expected) value.






39. The relationship between earnings - dividends - and book value in which end-ing book value is equal to the beginning book value plus earnings less dividends - apart from ownership transactions.






40. FRA A contract in which the initial value is intentionally set at a value other than zero and therefore requires a cash payment at the start from one party to the other.






41. An inventory account-ing method that identifies which specific inventory items were sold and which remained in inventory to be carried over to later periods.






42. Factors related to the company's internal performance - such as factors relating to earnings growth - earnings variability - earnings momentum - and financial leverage.






43. A means of settling payments in which the amount owed by the first party to the second is netted with the amount owed by the sec-ond party to the first; only the net difference is paid.






44. 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.






45. In the context ofmerger analysis - it is an estimate of a target com-pany's value found by discounting the company's expected future free cash flows to the present.






46. A form of restructuring in which sharehold-ers of a parent company receive a proportional number of shares in a new - separate entity; share-holders end up owning stock in two different companies where there used to be one.






47. Describes a scale constructed so that equal intervals on the vertical scale represent equal rates of change - and equal intervals on the horizontal scale represent equal amounts of change.






48. An approach to investing thatfocuses on the individual characteristics of securi-ties rather than on macroeconomic or overall market forecasts.






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






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