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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. Differences between tax and financial reporting of revenue (expenses) that will not be reversed at some future date. These result in a difference between the company's effective tax rate and statutory tax rate and do not result in a deferred tax item






2. Analysts who work at brokerages.






3. A function with non-negative values such that probability can be described by areas under the curve graphing the function.






4. A financial instrument whose valuede ends on the value of some nderlying asset orfactor (e.g. - a stock price - an interest rate - orexchange rate ).






5. 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.






6. A subset of a larger popula-tion created in such a way that each element of the population has an equal probability of being selected to the subset.






7. The process of determining the value of an asset or service on the basis of variables per-ceived to be related to future investment returns - or on the basis of comparisons with closely similar assets.






8. The capital structure at which the value of the company is maximized.






9. An intangible that cannot be acquired singly and that typically possesses an indefinite benefit period; an example is account-ing goodwill.






10. The earnings growth rate in a company's mature phase; an earnings growth rate that can be sustained long term.






11. An algorithm that pro-duces uniformly distributed random numbers between 0 and 1.






12. The effect of an investment on other things besides the investment itself.






13. A forecasting process in which the next period's value as predicted by the forecasting equation is substituted into the right-hand side of the equation to give a predicted value two periods ahead.






14. A long-term pattern of movement in a partic-ular direction.






15. Individual accounts to which an employee and typically the employer makes contributions - generally on a tax-advantaged basis. The amounts of contributions are defined at the outset - but the future value of the benefit is unknown. The employee bears






16. Each component put option in a floor.






17. The number of indepen-dent observations used.






18. Asset allocation in which the invest-ment in the market is increased if one forecasts that the market will outperform T-bills.






19. An option strategy involving the purchase of a put and sale of a call in which the holder of an asset gains protection below a certain level - the exercise price of the put - and pays for it by giving up gains above a certain level - the exercise pri






20. With reference to estimators - describes an estimator for which the probability of estimates close to the value of the population parameter increases as sample size increases.






21. A depreciation method that allocates evenly the cost of a long-lived asset less its estimated residual value over the estimated useful life of the asset.






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






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






24. 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.






25. Stan-dard errors of the estimated parameters of a regression that correct for the presence of het-eroskedasticity in the regression's error term.






26. Any departure of the market price of an asset from the asset's estimated intrinsic value.






27. A transaction between two affiliates - an investor company and an associate company such that the investor company records a profit on its income statement. An example is a sale of inven-tory by the investor company to the associate.






28. A regression assumption violation that occurs when two or more independent vari-ables (or combinations of independent variables) are highly but not perfectly correlated with each other.






29. Company growth in output or sales that is achieved by buying the necessary resources externally (i.e. - achieved through mergers and acquisitions) .






30. The single-period interest rate for a completely risk-free security if no infla-tion were expected.






31. The money of other countries regardless of whether that money is in the form of notes - coins - or bank deposits.






32. 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).






33. Income as reported on the income statement - in accordance with prevailing account-ing standards - before the provisions for income tax expense.






34. The value of exports of goods and ser-vices minus the value of imports of goods and services.






35. A random variable for which the range of possible outcomes is the real line (all real numbers between (-00 and +(0) or some subset of the real line.






36. An electronic payment system used widely in Europe and Japan.






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






38. The rate of return required by suppliers of capital for an individual source of a company's funding - such as debt or equity.






39. A matrix or square array whoseentries are covariances; also known as a variance-covariance matrix.






40. An operating segment or one level below an operating segment (referred to as a component) .






41. The ability to react and adapt to financial adversities and opportunities.






42. Activities that are part of the day-to-day business functioning of an entity - such as selling inven tory and providing services.






43. The rate of return that must be met fora project to be accepted.






44. Accounting method in which the only relevant transactions for the financial statements are those that involve cash.






45. A portfolio offering the highest expected return for a given level of risk as mea-sured by variance or standard deviation of return.






46. A legal entity with rights similar to those of a person. The chief officers - executives - or top managers act as agents for the firm and are legally entitled to authorize corporate activi-ties and to enter into contracts on behalf of the business.






47. 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.






48. Accounting that satisfies the condition that all changes in the book value of equity other than transactions with owners are reflected in income. The bottom-line income reflects all changes in shareholders' equity arising from other than owner transa






49. A comparison portfolio; a point of refer-ence or comparison.






50. The normal density with mean equal to 0 and standard deviation (0') equal to l.