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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. Valuation indicators that relate either price or a fundamental (such as earnings) to the time series of their own past val-ues (or in some cases to their expected value).






2. An esti-mate of a country's equity risk premium that is based upon the historical averages of the risk-free rate and the rate of return on the market portfolio.






3. A financial statement that reconciles the beginning-of-period and end-of-period balance sheet values of shareholders' equity; provides information about all factors affecting shareholders' equity.

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4. A bond in which the amount received for delivering the bond is largest com-pared with the amount paid in the market for the bond.






5. Income approach that estimates the value of all intangible assets of the business by capitalizing future earnings in excess of the estimated return requirements associated with working capital and fixed assets.






6. 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.






7. 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 .






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






9. The estimated gross amount of money that could be realized from the liquidation sale of an asset or assets - given a rea-sonable amount of time to find a purchaser or purchasers.






10. The use of inventory as collateral for a loan. The inventory is segregated and held in trust - and the proceeds of any sale must be remitted to the lender immediately. t-Test A hypothesis test using a statistic (I-statistic) that follows a t-<listrib






11. The standard deviation of the differ-ence in returns between an active investment portfolio and its benchmark portfolio; also called tracking error volatility - tracking risk - and active risk.






12. ROA) A prof-itability ratio calculated as operating income divided by average total assets.






13. Common-size analysis thatinvolves comparing a specific financial statementwith that statement in prior or future time peri-ods; also - cross-sectional analysis of one companywith another.






14. Deliberate activity aimed at influencing reporting earnings numbers - often with the goal of placing management in a favorable light; the opportunistic use of accruals to manage earnings.






15. A procedure of selecting every kth member until reaching a sample of the desired size. The sample that results from this procedure should be approximately random.






16. A legal corporate entity whose shareholders are its members. The members of the exchange have the privilege of executing transactions directly on the exchange.






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






18. A basis for reporting investment income in which the investing entity recognizes a share of income as earned rather than as divi-dends when received. These transactions are typi-cally reflected in Investments in Associates or Equity Method Investment






19. A conventional cash flow pattern is one with an ini tial outflow followed by a series of in ows.






20. The estimated fair value of the price multiple - usually based on fore-casted fundamentals or comparables.






21. Small numbers of observations at either extreme (small or large) ofa sample.






22. The expected return on an invest-ment minus the risk-free rate.






23. An increment or premium to value associated with a controlling ownership interest in a company.






24. Any test (or procedure) concerned with parameters or whose validity depends on assumptions concerning the population generat-ing the sample.






25. The set of assets available for investment.






26. Transactions that are denominated in a currency other than a com-pany's functional currency.






27. An option on the yield spread on a bond.






28. The dollar amount of cash divi-dends paid during a period per share of common stock.






29. Instruments that payinterest as the difference between the amountborrowed and the amount paid back.






30. The number of observations in a given interval (for grouped data) .






31. A series of put options on an interest rate - with each option expiring at the date on which the floating loan rate will be reset - and with each option having the same exercise rate. A floor in general can have an underlying other than the interest






32. A measure of goodness-of-fit of a regres-sion that is adjusted for degrees of freedom and hence does not automatically increase when another independent variable is added to a regression.






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






34. A statistical test for differ-ences based on paired observations drawn from samples that are dependent on each other.






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






36. The difference between net operating assets at the end and the beginning of the period compared to the average net operating assets over the period.






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






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






39. The official price - designated by the clearinghouse - from which daily gains and losses will be determined and marked to market.






40. The value of an option at expiration.






41. Commercial and investmentbanks that make markets in derivatives.






42. The sale - liquidation - or spin-off of a d'vi-sion or subsidiary.






43. FIrm The cash flow available to the company's suppliers of capital after all operat-ing expenses (including taxes) have been paid and necessary investments in working and fixed capital have been made.






44. Segment revenue divided by seg-ment assets .






45. A variation of a floating-rate note that has some type of unusual characteristic such as a leverage factor or in which the rate moves opposite to interest rates.






46. The variable whose variationabout its mean is to be explained by the regres-sion; the left-hand-side variable in a regressionequation.






47. 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






48. An approach to portfolio analysis using expected means - variances - and covariances of asset returns.






49. The sum of the sample observations - divided by the sampfe size.






50. Serial correlation in which a positive error for one observation increases the chance of a positive error for another observation - and a negative error for one observation increases the chance of a negative error for another observation.







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