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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. 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.






2. With reference to the error term of a regression - having a variance that differs across observations.






3. Next twelve months P/E: current market price divided by an estimated next twelve months EPS.






4. A solvency ratio calculated as total debt divided by total debt plus total share-holders ' equi ty.






5. Short-term obligations - such as accounts payable - wages payable - or accrued liabil-ities - that are expected to be settled in the near future - typically one year or less.






6. A procedure used in certain deriva-tive transactions that specifies that the long and short parties engage in the equivalent cash value of a delivery transaction.






7. A form of restructuring that involves the creation of a new legal entity and the sale of equity in it to outsiders.






8. A form of centralized risk management that typically encompasses the man-agement of a broad variety of risks - ind uding insuran -ce risk.






9. An option in which the holder has the right to make an unknown interest payment and receive a known interest payment.






10. To defer the decision to invest in a future projecn until the outcome of some or all of a current project is known. -Projects are sequenced through time - so that investing iN a project creates the option to invest in future projects.






11. The rate at which periodic interest payments are calculated.






12. A list of accounts used in an entity's accounting system.






13. With reference to assets - the amount of cash or cash equivalents that could currently be obtained by sell ing the asset i an orderly disposal; with reference to lia-bilities - the undiscounted amount of cash or cash equivalents expected to be paid t






14. Describes a time series whenits expected value and variance are cons tan t andfinite in all periods and when its covariance withitself for a fixed number of periods in the past orfuture is constant and finite in all periods.






15. An accelerated depre-ciation method - i.e. - one that allocates a relativelylarge proportion of the cost of an asset to the early years of the asset's useful life.






16. The differential of infor-mation between corporate insiders and outsiders regarding the company's performance and prospects. Managers typically have more informa-tion about the company's performance and prospects than owners and creditors.






17. A swap in which the notional principal changes according to a for-mula related to changes in the underlying.






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






19. Common sharehold-ers' equity minus intangible assets from the bal-ance sheet - divided by the number of shares outstanding.






20. Describes a distribution that is less peaked than the normal distribution.






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






22. The ability to make additional investments in a project at some future time if the financial results are strong.






23. An asset that trades in a market in which buyers and sellers meet - decide on a price - and the seller then delivers the asset to the buyer and receives payment. The underlying is the asset or other derivative on which a particular derivative is base






24. Above average or abnormally high growth rate in earnings per share.






25. Tax expenses that have been recognized and recorded on a company's income statement but which have not yet been paid.






26. (No longer allowed under U.S. GAAP or IFRS.)






27. A company's profits on its usual business activities before deducting taxes.






28. A country that is lending more to the rest of the world than it is borrowing from it.






29. The strategy a company fol-lows with regard to the amount and timing of div-idend payments.






30. Management's focus on reporting earnings that meet consensus estimates.






31. 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






32. The observation that P /Es tend to be high on depressed EPS at the bottom of a business cycle - and tend to be low on unusually high EPS at the top of a business cycle.






33. The return on a portfolio minus the return on the portfolio's benchmark.






34. Shareholders' equity (total assets minus total liabilities) minus the value of preferred stock; common shareholders' equity.






35. The accounting system of recording transactions in which every recorded transaction affects at least two accounts so as to keep the basic accounting equation (assets = liabilities + owners' equity) in balance.






36. The expected return on equi-ties minus the risk-free rate; the premium that investors demand for investing in equities.






37. A form of data min-ing that applies information developed by previ-ous researchers using a dataset to guide curren t research using the same or a related dataset.






38. The initial issuance ofcommon stock registered for public trading by a formerly private corporation.






39. A listing in which tile order of tile listed items does not matter.






40. A minimum level of cash to be held available-estimated in advance and adjusted for known funds transfers - seasonality - or other factors.






41. A merger involving companies inthe same line of business - usually as competitors.






42. A business owned and operated by more than one individual.






43. 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.






44. A rule explaining the uncon-ditional probability of an event in terms of proba-bilities of the event conditional on mutually exclusive and exhaustive scenarios.






45. An observation drawn from a uni-form distribution.






46. Options originally created with expirations of sev-eral years.






47. 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






48. An approach to valuing natu-ral resource companies that estimates company value on the basis of the market value of the natu-ral resources the company controls.






49. The process by which options and other derivatives are priced by treating investors as though they were risk neutral.






50. Sales minus the cost of sales ~.e . - the cost of goods sold for a manufactur-ing cOlp pany) .







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