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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 difference between the fixed rate on an interest rate swap and the rate on a Trea-sury note with equivalent maturity; it reflects the general level of credit risk in the market.






2. Net operating income less debt service and less taxes payable on income from operations.






3. Net earnings avail-able to common shareholders (i.e. - net income minus preferred dividends) divided by the weighted average number of common shares out-standing during the period.






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. Ratios that measure a company's ability to generate profitable sales from its resources (assets).






6. A model that specifies an asset's value relative to the value of another asset.






7. An acceler-ated depreciation method that involves depreciat-ing the asset at double the straight-line rate. This rate is multiplied by the book value of the asset at the beginning of the period (a declining balance) to calculate depreciation expense.






8. The annual return that an investor earns on a bond if the investor purchases the bond today and holds it until maturity.






9. A dollar deposited outside the United States.






10. Amounts owed to the company from parties other than customers.






11. A value at or below which a stated fraction of the data lies.






12. A contract that spans a number of accounting periods.






13. Describes a distribution that is more peaked than a normal distribution.






14. A range that has a given proba-bility that it will contain the population parameter it is intended to estimate.






15. A test that is not concerned with a parameter - or that makes minimal assumptions about the population from which a sam Ie comes.






16. A model for pncmg futurescontracts in which the futures price is determinedby adding the cost of carry to the spot price.






17. In the context of the weighted average cost of capital (WACC) - a break point is the amount of capital at which the cost of one or more of the sources of capital changes - leading to a change in the WACC.






18. The currency of the primary economic environment in which an entity operates.






19. Options that - if exercised - would result in the value received being worth more than the payment required to exercise.






20. The duration without dividing by 1 plus the bond's yield to maturity. The term - named for one of the economists who first derived it - is used to distinguish the calculation from mod-ified duration. See also modified duration.






21. The yield to maturity on a basis that ignores compounding.






22. A decision rule for choos-ing between two investments based on their means and variances.






23. Approach to translating for-eign currency financial statements for consolida-tion in which all assets and liabilities are translated at the current exchange rate. The cur-rent rate method is the prevalent method of translation.






24. 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 .






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






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

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27. A measure of financial lever-age calculated as average total assets divided by average total equity.






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






29. A swaption that allows the holder to enter into a swap as the fixed-rate payer and floating-rate receiver.






30. The combination of the underlying - puts - calls - and risk-free bonds that replicates a forward contract.






31. An option strategy involving the purchase of two puts and one call.






32. The combining of the results of oper-ations of subsidiaries with the parent compaIL y to present financial statements as if they were a sin-gle economic unit. The asset - iabilities - revenues and expenses of the subsidiaries are combined with those






33. The cash flow that is real-ized because of a decision; the changes or incre-ments to cash flows resulting from a decision or action.






34. The standard deviation of the differ-ences between a portfolio's returns and its bench-mark's returns; a synonym of active risk.






35. A balance sheet organized so as to group together the various assets and liabilities into subcategories (e.g. - current and noncurrent) .






36. Sales price less disposition costs - amortized mortgage loan bal-ance - and capital gains taxes.






37. 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.






38. The value of the middle item of a set of items that has been sorted into ascending or descending order; the 50th percentile.






39. Very liquid short-tenn investments - usually maturing in 90 days or less.






40. With respect to inventory accounting - the planned or target unit cost of inventory items or services.






41. In the context of the Treynor-Black model - the portfolio formed by mixing analyzed stocks of perceived nonzero alpha values. This portfolio is ultimately mixed with the passive mar-ket index portfolio.






42. Said of a sale in which proceeds are to be paid in installments over an extended period of time.






43. A probability distribution that specifies the probabilities for a group of related random variables.






44. The portfolio that exploits an arbitrage opportunity.






45. Ratios that measure the quantity of an asset or flow (e.g. - earnings) in relation to the price associated with a specified claim (e.g. - a share or ownership of the enterprise).






46. 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.






47. An option in which the underlying is a bond; primarily traded in over-the-counter markets.






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






49. The amount of money a buyer pays and seller receives to engage in an option transaction.






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







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