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CFA Level2 Vocab

Subjects : certifications, cfa
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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 merger or acquisition in which target shareholders are to receive shares of the acquirer's common stock as compensation.

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

3. Debt with the added feature that the bondholder has the option to exchange the debt for equity at prespecified terms.

4. Trading ex-dividend refers to shares that no longer carry the right to the next dividend payment.

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

6. A theory of regulatory behavior that holds that regulators must take account of the demands of three groups: legislators - who established and oversee the regulatory agency; firms in the regulated industry; and consumers of the regulated indus-try's

7. A graphical representa-tion of the expected return and risk of all portfo-lios that can be formed using two assets.

8. The quantity of goods and services that a country exports to pay for its imports of goods and services.

9. The investigation of issues relating to the accuracy of reported accounting results as reflections of economic per-formance; quality of earnings analysis is broadly understood to include not only earnings manage-ment - but also balance sheet manageme

10. A factor related to the econ-omy - such as the inflation rate - industrial produc-tion - or economic sector membership. acroeconomic factor model A multifac tor model in which the factors are surprises in macroeco-nomic variables that significan tly

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

12. The set of rules used to select a sample.

13. Present obligations of an enterprise aris-ing from past events - the settlement of which is expected to result in an outflow of resources embodying economic benefits; creditors' claims on the resources of a company.

14. The lowest possible value of an option.

15. The present discounted value of future cash flows: For assets - the present dis-counted value of the future net cash inflows that the asset is expected to generate; for liabilities - the present discounted value of the future net cash outflows that a

16. The share price at a particular point in the future.

17. With reference to investment selection processes - an approach that starts with macro selection (i.e. - identifying attractive geo-graphic segments andVor industry segments) and then addresses selection 0 the most attractive investments within those

18. Public-company com-parables for the company being valued.

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

20. A market index portfolio.

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

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

23. The contribution to active risk squared resulting from the portfolio's different-than-benchmark exposures relative to factors specified in the risk model.

24. Regulation that allowsprices to reflect only the actual average cost ofproduction and no monopoly profits.

25. 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.

26. In reference to short-term cash man-agement - an investment strategy characterized by monitoring and attempting to capitalize on mar-ket conditions to optimize the risk and return relationship of short-term investments.

27. Earnings per share divided by price; the reciprocal of the PIE ratio.

28. Valuation measures and other factors related to share price or the trading characteristics of the shares - such as earn-ings yield - dividend yield - and book-to-market value.

29. The square root of the average squared forecast error; used to compare the out-of-sample forecasting perfor-mance of forecasting models.

30. The process of accumulating interest on interest.

31. The probability of the joint occur-rence of stated even ts.

32. The relationship between the option price and the underlying price - which reflects the sensi-tivity of the price of the option to changes in the price of the underlying.

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

34. The estimation of an unknown value on the basis of two known values that bracket it - using a straight line between the two known values.

35. The owners' remaining claim on the company's assets after the liabilities are deducted.

36. The financial state-ment that presents an entity's current financial position by disclosing resources the entity con-trols (its assets) and the claims on those resources (its liabilities and equity claims) - as of a particular point in time (the date

37. Observations of a variable over time.

38. A bias caused by using information that was not available on the test date.

39. A test for conditional het-eroskedasticity in the error term of a regression.

40. Linear regression involv-ing two or more independent variables.

41. A financial state-ment that reconciles beginning-of-period ana end-of-period balance sheet values of retained income; shows the linkage between the balance sheet and income statement.

42. The day that the company actually mails out (or electronically transfers) a dividend payment.

43. A permissible delivery procedure used by futures market participants - in which the long and short arrange a delivery pro-cedure other than the normal procedures stipu-lated by the futures exchange.

44. A capital rationing environment assumes that the company has a fixed amount of funds to invest.

45. With respect to the application of the LIFO inventory method - the liquidation of old - relatively low-priced inventory; happens when the volume of sales rises above the volume of recent purchases so that some sales are made from relatively old - low

46. The risk associated with the pos-sibility that a payment currently due will not be made.

47. The difference between reported earnings per share and expected earnings per share.

48. The most common type of commun-size analysis - ill which the accounts in a given period are compared to a benchmark item in that same year.

49. Internal or external limita-tions on investments.

50. Observations over individual units at a point in time - as opposed to time-series data.