Test your basic knowledge |

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. Quantiles that divide a distribution into four equal parts.






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






3. The part of the execution step of the portfolio manage-ment process in which investment strategies are integrated with expectations to select a portfolio of assets.






4. The return that an investorearns during a specified holding period; a syn-onym for total return.






5. A profitability ratio calcu-lated as net income divided by average sharehold-ers' equity.






6. The hypothesis accepted when the null hypothesis is rejected.






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






8. Options that - if exercised - would result in the value received being worth more than the payment required to exercise.






9. A transformation that involves sub-tracting the mean and dividing the result by the standard deviation.






10. An estimation formula; the formula used to compute the sample mean and other sample statistics are examples of estimators.






11. 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.






12. A value against which a computed test statistic is compared to decide whether to reject or not reject the null hypothesis.






13. The present value of an investment's cash inflows (benefits) minus the present value of its cash outflows (costs).






14. A limit move in the futures market in which the price at which a transaction would be made is at or below the lower limit.






15. A beta that is based at least in part on fundamental data for a company.






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






17. An option in which the underlying value equals the exercise price.






18. An inventory accounting method that averages the total cost of available inventory items over the total units avail-able for sale.






19. A loan in which the interest rate is reset at least once after the starting date.






20. The difference between the third and fi rst quarti les of a dataset.






21. A two-dimensional plot of pairs of obser-vations on two data series.






22. 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).






23. 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.






24. The yield to maturity on a basis that ignores compounding.






25. The day that employees actually exer-cise the options and convert them to stock.






26. Revenue after adjustments (e.g. - for estimated returns or for amounts unlikely to be collected).






27. Netting the market values of all derivative contracts between two parties to deter-mine one overall value owed by one party to another in the event of bankruptcy.






28. Approach that values a private company based on the values of the underlying assets of the entity less the value of any related liabilities.






29. Net earnings avail-able to common shareholders (i.e. - net income minus preferred dividends) divided by the weighted average number of common shares out-standing during the period.






30. The condition in which supply equals demand.






31. An option in which the underlying is a stock index.






32. The Eurodollar rate at which London banks lend dollars to other London banks; considered to be the best representative rate on a dollar borrowed by a private - high-quality borrower.






33. A basis for stating an annual yield that annualizes a semiannual yield by dou-bling it.






34. A multifactor model In which statistical methods are applied to a set of historical returns to determine portfolios that best explain either historical return covariances or vanances.






35. CreaLing a contrac t with standard and generally accepted terms - which makes it moreacceptable to a broader group of participants.






36. Assets that can be most readily con-verted to cash (e.g. - cash - short-term marketable investments - receivables) .






37. With reference to events - the propertythat the probability of one event occurringdepends on (is related to) the occurrence ofanother event.






38. The amount of book value (also called carrying value) of common equity per share of common stock - calculated by dividing the book value of shareholders' equity by the num-ber of shares of common stock outstanding.






39. A result in statistics that states that the sample mean computed from large sam-ples of size n from a population with finite vari-ance will follow an approximate normal distribution with a mean equal to the population mean and a variance equal to the






40. An estimate of the average time that elapses between paying suppliers for materi-als and collecting cash from the subsequent sale of goods produced.






41. The sample autocorrela-tions of the residuals.






42. 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.






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






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






45. A condition in the futures markets in which the benefits of holding an asset exceed the costs - leaving the futures price less than the spot price.






46. Risk for which investors demand com-pensation for bearing (e.g. - equity risk - company-specific factors - macroeconomic factors).






47. A distribution that specifies the probabilities for a single random variable.






48. The rate at which an option's time value decays.






49. Members ips in a derivatives exchange.






50. A tabular display of data summarized into a relatively small number of intervals.