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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. The uncertainty associated with tax laws.






2. Potential future payments to the seller that are contingent on the achieve-ment of certain agreed on occurrences.






3. The mix of a company's variable costsand fixed costs.






4. A public offer whereby the acquirer invites target shareholders to submit ('tender') their shares in return for the proposed payment.






5. An option in which the underly-ing is an interest rate.






6. A swap in which the underlying is a commodity such as oil - gold - or an agricultural product.






7. The posi tive square root of tar-get semivar·ance.






8. A person or organization seeking to profit by acquiring a company and reselling it - or seeking to profit from the takeover attempt itself (e.g. - greenmail).






9. The company's total cost of capital in money terms.






10. A type of swap transaction used as a credit derivative in which one party makes peri-odic payments to the other and receives the prom-ise of a payoff if a third party defaults.






11. The government's holding of foreign cun; - e.!}cy.






12. CAPM An adaptation of the CAPM that adds to the CAPM a premium for small size and company-specific risk.






13. The accounting principle that expenses should be recognized when the associ-ated revenue is recognized.






14. A forward contract to enter into a swap.






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






16. As an approach to valuing a company - the sum of the value of the company - assuming no use of debt - and the net present value of any effects of debt on company value.






17. An option strategy involving the purchase of one option and sale of another option that is identical to the first in all respects except either exercise price or expiration.






18. The price of a security with accrued interest.






19. The differences between actual and predicted value of time series outside the sample period used to fit the model.






20. A measure of dispersion relat-ing to a population - calculated as the mean of the squared deviations around the population mean.






21. Analysis that involves com-parisons across individuals in a group over a given time period or at a given point in time.






22. A system that allows individual units within an organization to manage risk. Decentralization results in duplication ofeffort but has the advantage of having people closer to the risk be more d irectly involved in its management.






23. The value that investors forgo by choosing a particular course of action; the value of something in its best alternative use.






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






25. Segment revenue divided by seg-ment assets .






26. The minimum real wage rate needed to maintain life.






27. Uncertainty with respect to the quantity of goods and services that a company is able to sell and the price it is able to achieve; the risk related to the uncertainty of revenues.






28. The arithmetic mean value of a population; the arithmetic mean of all the obser-vations or values in the population.






29. A striNgent measure of liquidity th t ind'cates a company's ab'li ty to satisfY current liabilities with its most liquid assets - calcu-lated as (cash + short-tenn marketable invest-ments + receivables) divided by current liabilities.






30. The price received to sell an asset or trans-fer a liability.






31. An approach to valuation that involves using a price multiple to evaluate whether an asset is relatively fairly valued - rela-tively undervalued - or relatively overvalued when compared to a benchmark value of the multiple.






32. A strategy in which a position is hedged by making frequent adjustments to the quantity of the instrument used for hedging in relation to the instrument being hedged.






33. Controlling additional property throughreinvestment - refinancing - and exchanging.






34. 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.






35. Orders to buy or sell that are too large for the liquidity ordinarily available in dealer networks or stock exchanges.






36. A variation of the monetary/ nonmonetary translation method that requires not only monetary assets and liabilities - but also nonmonetary assets and liabilities that are mea-sured at their current value on the balance sheet date to be translated at t






37. An increase in a company's earnings that results as a consequence of the idio-syncrasies of a merger transaction itself rather than because of resulting economic benefits ofthe combination.






38. Assets that are expected to be consumed or converted into cash in the near future - typically one year or less.






39. In reference to <wrporate taxes a split-rate system taxes earnings to be distributed as dividends at a different rate than earnings to be retained. Corporate profits distributed as dividends are taxed at a lower rate than those retained in the busine






40. A valuation indicator based on past pdce movement.






41. An investment where the investor exerts control over the investee - typically by having a greater than 50 percent ownership in the investee.






42. The possibility that when we use a time-series sample - our statistical conclusion may be sensitive to the starting and ending dates of the sample.






43. A sample measure of the degree of dispersion of a distribution - calculated by dividing the sum of the squared deviations from the sam-ple mean by the sample size minus 1.






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






45. A spontaneous form of credit in which a purchaser of the goods or service is financing its purchase by delaying the date on which payment is made.






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






47. The value of a company if the com-pany were dissolved and its assets sold individually.






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






49. The ratio of the market value of debt and equity to the replacement cost of total assets.

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50. A forward contract calling for one party to make a fixed interest payment and the other to make an interest pay-ment at a rate to be determined at the contract expiration.