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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 swap in which the payments are basedon the difference between interest rates in twocountries but payments are made in only a singlecurrency.






2. The amount to which a payment or series of payments will grow by a stated future date.






3. The price paid to buy an asset.






4. Temporary differ-ences that result in a red uction of or deduction from taxal:J e income in a future period when the balance sheet item is n~ covered or settled.






5. The perceived ability of the bor-rower to pay what is owed on the borrowing in a timely manner; it represents the ability of a com-pany to withstand adverse impacts on its cash flows.






6. Any rate used in finding the present value of a future cash flow.






7. A statistical model used to clas-sifY borrowers according to creditworthiness.






8. The sum of market value of common equity - book value of preferred equity - and face value of debt.






9. A valuation indicator based on past pdce movement.






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






11. The number of units produced and sold at which the company's net income is zero (revenues = total costs).






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






13. A quantitative measure of skew (lack of symmetry); a synonym of skew.






14. Members ips in a derivatives exchange.






15. Costs of inven tories including costs of purchase - costs of conversion - other costs to bring the inventories to their present location and condition - and the allocated portion of) fixed production overhead costs.






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






17. A dividend payout pol-icy under which earnings in excess of the funds necessary to finance the equity portion of com-pany's capital budget are paid out in dividends.






18. A mean computed after excluding a stated small percentage of the lowest and highest observations.






19. 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.






20. The autocorrelation of the error term.






21. The differential of infor-mation between corporate insiders and outsiders regarding the company's performance and prospects. Managers typically have more informa-tion about the company's performance and prospects than owners and creditors.






22. Plan in which the company promises to pay a certain annual amount (defined benefit) to the employee after retirement. The company bears the investment risk of the plan assets .






23. Bias that may result when failed or defunct companies are excluded from member-ship in a group.






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






25. Market makers that buy and sell by quoting a bid and an ask price. They are the primary providers ofliquidity to the market.






26. In using the method of com parables - the value of a price mul-tiple for the comparison asset; when we have com-parison assets (a group) - the mean or median value of the multiple for the group of assets.






27. A sample measure of the degree of a distribution's peakedness.






28. Total assets minus total liabilities.

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






30. A measure of the expected annual cash flow from the operation of a real estate investment after all expenses but before taxes.






31. Research and development costs relating to projects that are not yet completed - such as have been incurred by a company that is being acquired.






32. A contract in which one party has the right to claim a payment from another party in the event that a specific credit event occurs over the life of the contract.






33. A contract calling for the purchase of an individual stock - a stock portfolio - or a stock index at a later date at an agreed-upon price.






34. A merger involving the pur-chase of a target ahead of the acquirer in the value or production chain; for example - to acquire a supplier.






35. A rule explaining the expected value of a random vari-able in terms of expected values of the random variable conditional on mutually exclusive and exhaustive scenarios.






36. A trader who typically holds posi-tions open overnight.






37. 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






38. The difference between the market price of the option and its intrinsic value - determined by the uncertainty of the underlying over the remaining life of the option.






39. Observations through time on a single characteristic of multiple observational units.






40. The risk of a change in value of a n asset or liability denomi-nated in a foreign currency due to a change in exchange rates.






41. Measure of financial reporting quality by subtracting the mean or median ratio for a given sector group from a given company's ratio.






42. When a company has a single risk management group that monitors and controls all of the risk-taking activities of the organization.






43. 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.






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






45. A balance sheet that does not show subtotals for current assets and current liabilities.






46. The value of the U.S. dollar expressed in units of foreign currency per U.S. dollar.






47. 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.






48. Ratios that measure the quantity of an asset or flow (e.g. - earnings) in relation to the price associated with a specified claim (e.g. - a share or ownership of the enterprise).






49. The relationship amongputs - calls - and forward contracts.






50. A public document that provides the material facts concerning matters on which shareholders will vote.