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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 risk that environmental - social - or governance risk fac tors will result in significant costs or other losses to a company and its share-holders; the risk arising from a company's obliga-tion to meet required payments under its financ-ing agree






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






3. An intangible that can beacquired singly and is typically linked to specificrights or privileges having finite benefit periods(e.g. - a patent or trademark).






4. 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






5. A method of account-ing for joint ventures where the venturer's share of the assets - liabilities - income and expenses of the joint venture are combined on a line-by-line basis with similar items on the venturer's financial statements.






6. With reference to the presen-tation of expenses in an income statement - the grouping together of expenses serving the same function - e.g. - all items that are costs of good sold.






7. A quantity - calculated based on a sam-ple - whose value is the basis for deciding whether or not to reject the null hypothesis.






8. Aka also enterprise risk management.






9. The autocorrelation of the error term.






10. A dollar deposited outside the United States.






11. The cost associated with holding someasset - including financing - storage - and insurancecosts. Any yield received on the asset is treated as anegative carrying cost.






12. An activity ratio calculated as purchases divided by average trade payables.






13. A rate of return that reflects the rela-tionship between differently dated cash flows; a discount rate.






14. An inter-national agreement signed in 1947 to reduce tar-iffs on international trade.






15. 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.






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






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






18. The value of the U.S. dollar expressed in units of foreign currency per U.S. dollar.






19. The relationship between option price and volatility.






20. A regression that expresses the dependen t and independent vari-ables as natural logarithms.






21. Nonconvertible - noncallable preferred stock with a specified divi-dend rate that has a claim on earnings senior to the claim of common stock - and no maturity date.






22. Plan in which the company promises to pay a certain annual amount (defined benefit) to the employee after retirement. The company bears the investment risk of the plan assets .






23. The risk associated with operating earnings. Operating earnings are uncertain because total revenues and many of the expendi-tures contributed to produce those revenues are uncertain.






24. Options that are far out-of-the-money.






25. A method of account-ing in which combined companies were portrayed as if they had always operated as a single eco-nomic entity. Called pooling of interests under






26. The practice of determining a model by extensive searching through a dataset for statisti-cally significant patterns.






27. The condition in futures markets in which futures prices are higher than expected spot prices.






28. The correlation of a time series with its own past values.






29. A trader who offers to buy or sell futures contracts - holding the position for only a brief period of time. Scalpers attempt to profit by buy-ing at the bid price and selling at the higher ask price.






30. The purchase of some portion of one company by another; the purchase may be for assets - a definable segment of another entity - orthe purchase of an entire company.






31. 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.






32. The characteristic of minimum-variance frontiers that they are sensitive to small changes in inputs.






33. When a company has a single risk management group that monitors and controls all of the risk-taking activities of the organization.






34. With reference to cash flow statements - a format for the presenta-tion of the statement which - in the operating cash flow section - begins with net income then shows additions and subtractions to arrive at operatingcash flow.






35. The time remaining in the life of a derivative - typically expressed in years.






36. The average exchange rate - with individual currencies weighted by their importance in U.S. international trade.






37. A combination of interest rate put options designed to hedge a lender against lower rates on a floating-rate loan.






38. A measure of the expected annual cash flow from the operation of a real estate investment after all expenses but before taxes.






39. An obligation that is expected to be settled - with the outflow of resources embody-ing economic benefits - over a future period gen-erally greater than one year.






40. 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






41. A loss in value caused bychanges in price levels. Monetary assets experi-ence purchasing power losses during periods ofinflation.






42. A measure of VAR equivalentto the analytical method bu t that refers to the use of delta to estimate the option's price sensitivity.






43. The expected excess return on the market over the risk-free rate.






44. Valuation indi-cators that compare a stock's performance during a period either to its own past performance or to the performance of some group of stocks.






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






46. Uncorrelated; at a right angle.






47. An extra return to investors to compensate for lack of a public mar-ket or lack of marketability.






48. Managers who hold portfolios that differ from their benchmark port-folio in an attempt to produce positive risk-adjusted returns.






49. The hypothesis that higher debt levels discipline managers by forcing them to make fixed debt service payments and by reducing the company's free cash flow.






50. The day that options are granted to employees; usually the date that compensation expense is measured if both the number of shares and option price are known.