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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. An extra return that compen-sates investors for the risk of loss relative to an investment's fair value if the investment needs to be converted to cash quickly.






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






3. Agreements made by a company in bankruptcy under which a company's capital struc-ture is altered and/ or alternative arrangements are made for debt repayment; U.S. Chapter II bankruptcy. The company emerges from bank-ruptcyas a going concern.






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






5. A legal restriction that dividends cannot exceed retained earnings.






6. A listing in which tile order of tile listed items does not matter.






7. The line with an inter-cept point equal to the risk-free rate that is tangent to the efficient frontier of risky assets; represents the efficient frontier when a risk-free asset is available for investment.






8. Management's focus on reporting earnings that meet consensus estimates.






9. Real CDP divided by the population.






10. Long-term assets with physical sub-stance that are used in company operations - such as land (property) - plant - and equipment.






11. Members ips in a derivatives exchange.






12. The combination of puts - the underly-ing - and risk-free bonds that replicates a call option.






13. The currency in which finan-cial statement amounts are presented.






14. An interest rate swap in which the notional principal is indexed to the level of interest rates and declines with the level ofinterest rates according to a predefined schedule. This type of swap is frequently used to hedge secu-rities that are prepai






15. A liquidi ty ratio calculated as (cash + short-term marketable investments) divided by current liabilities; measures a company's ability to meet its current obligations with just the cash and cash equivalents on hand.






16. Weights that are used to compute a binomial option price. They are the probabilities that would apply if a risk-neutral investor valued an option.






17. The correlation of a time series with its own past values.






18. The value of skills and knowledgepossessed by the workforce.






19. A qualitative-dependent-variable multiple regression model based on the normal distribution.






20. 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.






21. The probability of an event estimated as a relative frequency of occurrence.






22. A corporate transac-tion in which management repurchases all out-standing common stock - usually using the proceeds of debt issuance.






23. An option strategy involving the purchase of two calls and one put.






24. The potential for asymmetric information to bring about a general decline in product quality in an industry.






25. The percentage of total earnings paid out in dividends in any given year (in per-share terms - DPS/ EPS).






26. The owners of a joint venture. Each is active in the management and shares control of the joint venture.






27. A striNgent measure of liquidity th t ind'cates a company's ab'li ty to satisfY current liabilities with its most liquid assets - calcu-lated as (cash + short-tenn marketable invest-ments + receivables) divided by current liabilities.






28. A correlation that misleadingly points towards associations between variables.






29. A pre-offer takeover defense mechanism that makes it prohibitively costly for an acquirer to take control of a target without the prior approval of the target's board of directors.






30. The process of using an option to buy or sell the underlying.






31. The amount of cash payable by a company to the bondholders when the bonds mature; the promised payment at maturity sepa-rate from any coupon payment.






32. 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.






33. A balance sheet asset that arises when an excess amount is paid for income taxes relative to accounting profit. The taxable income is higher than accounting profit and income tax payable exceeds tax expense. The company expects to recove r the differ






34. A graphical depic-tion of a company's investment opportunities ordered from highest to lowest expected return. A company's optimal capital budget is found where the investment opportunity schedule inter-sects with the company's marginal cost of capit






35. A trader who offers to buy or sell futures contracts - holding the position for only a brief period of time. Scalpers attempt to profit by buy-ing at the bid price and selling at the higher ask price.






36. The difference between the actual value per share and the no-growth value per share.






37. Small numbers of observations at either extreme (small or large) ofa sample.






38. The condition of being of sufficient importance so that omission or misstatement of the item in a financial report could make a differ-ence to users' decisions.






39. An option strategy that involves buying a call with a lower exercise price and selling a call with a higher exercise price. It can also be exe-cuted with puts.






40. Internal or external limita-tions on investments.






41. A prof -itabili ty ratio calculated as operating income (i.e. - income before inte est and taxes) divided by revenue.






42. Future benefits promised to the employee regardless of continuing service. Bene-fits typically vest after a specified period of service or a specified period of service combined with age.






43. A legal corporate entity whose shareholders are its members. The members of the exchange have the privilege of executing transactions directly on the exchange.






44. Very liquid short-tenn investments - usually maturing in 90 days or less.






45. The system of principles - policies - procedures - and clearly defined responsi-bilities and accountabilities used by stakeholders to overcome the conflicts of interest inherent in the corporate form.






46. A swap transaction in which at least one cash flow is tied to the return to an equity portfo-lio position - often an equity index.






47. Residual income after the forecast horizon.






48. Heteroskedasticity in the error variance that is correlated with the values of the independent variable(s) in the regression.






49. Temporary differ-ences that result in a taxable amount in a future period when determining the taxable profit as the balance sheet item is recovered or settled. t-Distribution A symmetrical distribution defined by a single parameter - degrees of free






50. The dollar amount of cash divi-dends paid during a period per share of common stock.







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