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






2. A series of call options on an interest rate - with each option expiring at the date on which the floating loan rate will be reset - and with each option having the same exercise rate. A cap in general can have an underlying other than an interest ra






3. An option strategy involving the hold-ing of an asset and sale of a call on the asset.






4. A transaction whereby the target company management team converts the target to a privately held company by using heavy borrowing to finance the purchase of the target company's outstanding shares.






5. A money measure of the goods and services produced within a country's borders over a stated time period.






6. The price paid to buy an asset.






7. An estimate of a parameter that involves combining (pooling) observations from two or more samples.






8. The sample autocorrela-tions of the residuals.






9. A combination of a European call and a risk-free bond that matures on the option expiration day and has a face value equal to the exer-cise price of the call.






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






11. The naturalloga-rithm of 1 plus the holding period return - or equivalently - the natural logarithm of the ending price over the beginning price.






12. With respect to inventory accounting - the planned or target unit cost of inventory items or services.






13. Accounting method in which the only relevant transactions for the financial statements are those that involve cash.






14. Economic characteristics of a busi-ness such as profitability - financial strength - and risk.






15. The day that the corporation issues a statement d eclaring a specific dividend.






16. An investment decision rule that states that an investment should be undertaken if its NPV is positive but not undertaken if its NPV is negative.






17. The process of accumulating interest on interest.






18. 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.






19. With respect to the format of the income statement - a format that presents a subtotal for gross profit (revenue minus cost of goods sold).






20. CMT A hypothetical U.S. Treasury note with a constant maturity. A CMT exists for various years in the range of 2 to






21. The slope coefficients in a multiple regression.






22. The most recent quarterly dividend multiplied by four.






23. 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.






24. A European-style option with a value at maturity equal to the difference between the stock price at maturity and the average stock price during the life of the option - or $0 - whichever is greater.






25. The date on which the parties to a swap make payments.






26. A level of inventory beyond anticipated needs that provides a cushion in the event that it takes longer to replenish inventory than expected or in the case of greater than expected demand.






27. The effect of an investment on other things besides the investment itself.






28. Investments in which investors exert significant influence - but not con-trol - over the investee. Typically - the investor has 20 to 50 % ownership in the investee.






29. An active investment strategy whereby the timing of cash outflows is not matched with investment maturities.






30. The condition in which supply equals demand.






31. Aka also enterprise risk management.






32. The expansion of production pos-sibilities that results from capital accumulation and technological change.






33. An Activity ratio calculated as total revenue divided by average net fixed assets.






34. A comparison portfolio; a point of refer-ence or comparison.






35. The value of an asset given a hypothetically complete understand-ing of the asset's investment characteristics; the value obtained if an option is exercised based on current conditions.






36. A measurement scale that categorizes data but does not rank them.






37. The market price of an asset or lia-bility that trades regularly.






38. A time series regressed on its own past values - in which the independent vari-able is a lagged value of the dependent variable.






39. 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.






40. With reference to equity investors - investors who are focused on paying a relatively low share price in relation to earnings or assets per share.






41. Individual accounts to which an employee and typically the employer makes contributions - generally on a tax-advantaged basis. The amounts of contributions are defined at the outset - but the future value of the benefit is unknown. The employee bears






42. 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.






43. An approach to recognizing credit losses on customer receivables in which the company waits until such time as a customer has defaulted and only then recognizes the loss.






44. Said of a sale in which proceeds are to be paid in installments over an extended period of time.






45. A possible value of a random variable.






46. Cash and investments (specifi-cally cash - cash equivalents - and short-term investments) .






47. An approach to investing that typically begins with macroeconomic forecasts.






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






49. A measure of the time needed to convert raw materials into cash from a sale; it con-sists of the number of days of inventory and the number of days of receivables.






50. A feature of futures markets in which futures prices provide valuable information about the price of the underlying asset.