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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 transaction executed inthe foreign exchange market in which a currencyis purchased (sold) and a forward contract is sold(purchased) to lock in the exchange rate forfuture delivery of the currency. This transactionshould earn the risk-free rate of t






2. A quantity - calculated based on a sam-ple - whose value is the basis for deciding whether or not to reject the null hypothesis.






3. A non-operating entity created to carry out a specified purpose - such as leasing assets or securitizing receivables; can be a corporation - partnership - trust - limited liability - or partnership formed to facilitate a specific type of business act






4. The amount of dispersion rela-tive to a reference value or benchmark.






5. The error of rejecting a true null hypothesis.






6. With reference to a random vari-able - the property of having characteristics such as mean and variance that are not constant through time.






7. The risk associated with the pos-sibility that a payment due at a later date will not be made.






8. Resources controlled by an enterprise as a result of past events and from which future eco-nomic benefits to the enterprise are expected to flow.






9. A strategic corporate goal repre-senting the long-term proportion of earnings that the company intends to distribute to shareholders as dividends.






10. The hypothesis to be tested.






11. A time series in which the value ofthe series in one period is the value of the series in the previous period plus an unpredictable random error.






12. 1) An agent who executes orders to buy orsell securities on behalf of a client in exchange for a commission. 2) See Futures commission merchants.






13. A type of weighted mean computed by averaging the reciprocals of the ohservations - then taking the reciprocal of that average.






14. A variation of VAR that reflects the risk of a company's cash flow instead of its market value.






15. A pre-offer takeover defense mech-anism involving the corporate charter (e.g. - stag-gered boards of directors and supermajority provisions) .






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






17. Costs that remain at the same level regardless of a company's level of production and sales.






18. Estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.






19. A depreciation method tHat allocates the cost of a long-lived asset based on-actual usage during the period .






20. The market in which the currency of one country is exchanged for the cur-rency of another.






21. Unexpected earnings divided by the standard deviation of analysts' earnings forecasts.






22. The loss in the value of an option resulting from movement of the option price toward its payoff value as the expiration day approaches.






23. The process of allocating the cost of intangible long-term assets having a finite useful life to accounting periods; the allocation of the amount of a bond premium or discount to the periods remaining until bond maturity.






24. The accuracy with which a company's reported financials reflect its operat-ing performance and their usefulness for forecast-ing future cash flows.






25. An annuity having a first cash flow that is paid immediately.






26. An amount equal to net taxes minus government expenditure on goods and services.






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






28. The seller of a derivative contract. Also refers to the position of being short a derivative.






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






30. A reduction in proportional ownership inter-est as a result of the issuance of new shares.






31. Factors that affect the average returns of a large number of different assets.






32. 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.






33. A number between - 1 and + 1 that measures the co-movement (linear association) between two random variables.






34. A rate of interest based on the secu-rity's face value.






35. Ratio of sales on credit to the average balance in accounts receivable.






36. The difference between reported net income on an accrual basis and the cash flows from operating and investing activities.






37. An electronic payment system used widely in Europe and Japan.






38. Options on individual stocks; also known as stock options.






39. Theories that posit that cor-porate executives are motivated to engage in mergers to maximize the size of their company rather than shareholder value.






40. Ratios that measure a company's ability to meet its long-term obligations.






41. A variation of a forward contract that has essentially the same basic definition but with some additional features - such as a clearing-house guarantee against credit losses - a daily settlement of gains and losses - and an organized electronic or fl






42. Any departure of the market price of an asset from the asset's estimated intrinsic value.






43. The percentage of a market that a particular fi rm supplies; used as the primary measure of monopoly power.






44. 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






45. When a bankrupt company is allowed to enforce contracts that are favorable to it while walking away from contracts that are unfa-vorable to it.






46. The difference between net operating assets at the end and the beginning of the period compared to the average net operating assets over the period.






47. Current market w ice divided by the most recent quarterly per-share dividend multiplied by four.






48. Depreciatiolil methods that allocate a relatively large proportion of the cost of an asset to the early years of the asset's useful life.






49. A model that specifies an asset's intrinsic value.






50. Futures contracts in which the underlying is a stock - bond - or currency.