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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 contri-bution to active risk squared resulting from the portfolio's active weights on individual assets as those weights interact with assets' residual risk.






2. A synonym for robust standard errors.






3. A ratio in property valua-tion; net operating income divided by sale price. Also known as the going-in rate.






4. A guarantee from the clear-inghouse that if one party makes money on a transaction - the clearinghouse ensures it will be paid.






5. The system of principles - policies - procedures - and clearly defined responsi-bilities and accountabilities used by stakeholders to overcome the conflicts of interest inherent in the corporate form.






6. The positive square root of semivari-ance (sometimes called semistandard deviation) .






7. The rate demanded by purchasers of bonds - given the risks associated with future cash payment obligations of the particular bond issue.






8. The net amount of cash provided from operating activities.






9. An investment decision rule that accepts projects or investments for which the IRR is greater than the opportunity cost of capital.






10. The positive square root of the variance; a measure of dispersion in the same units as the original data.






11. Factors that affect the average returns of a large number of different assets.






12. Generally - a synonym for revenue; 'sales' is generally understood to refer to the sale of goods - whereas 'revenue' is understood to include the sale of goods or services.






13. The costs of holding an asset - generally a function of the physical char-acteristics of the underlying asset.






14. 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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15. Options that relate to investment deci-sions such as the option to time the start of a proj-ect - the option to adjust its scale - or the option to abandon a project that has begun.






16. An attempt to acquire a com-pany against the wishes of the target's managers.






17. The probability-weighted average of the possible outcomes ofa random variable.






18. Individuals or companies b hat execute fu tures transactions for other parties off the exchange.






19. An arrangement whereby someone - an agent - acts on behalf of another per-son - the principal.






20. An inventory accounting method that averages the total cost of available inventory items over the total units avail-able for sale.






21. 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.






22. A fUl !lction giving the probability of joint occurrences of values of stated random variables.






23. Revenue after adjustments (e.g. - for estimated returns or for amounts unlikely to be collected).






24. The theory that managers take into account how their actions might be inter-preted by outsiders and thus order their prefer-ences for various forms of corporate financing. Forms of financing that are least visible to out-siders (e.g. - internally gen






25. 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).






26. A payment system in which cus-tomer payments are mailed to a post office box and the banking institution retrieves and deposits these payments several times a day - enabling the company to hav use of the fund sooner than in a centralized system in wh






27. The required rate of return on com-mon stock.






28. A series of call 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 cap in general can have an underlying other than an interest ra






29. The use of an inaccurate pricing model for a particular investment - or the improper use of the right model.






30. A type of finance lease - from a lessor perspective - where the present value of the lease payments (lease receivable) equals the carry-ing value of the leased asset. The revenues earned by the lessor are financing in nature.

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31. A capital rationing environment assumes that the company has a fixed amount of funds to invest.






32. A variation of the market approach; considers actual transactions in the stock of the subject private company.






33. The expected value (the probability-weighted average) of squared deviations from a random variable's expected value.






34. Items that affect comprehensive income but which bypass the income statement.






35. An arrangement whereby a customer authorizes a debit to a demand account; typically used by companies to collect routine pay-ments for services.






36. The average squared deviation below the mean.






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






38. A swap in which the floating payments have a lower limit.






39. 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.






40. A type of qualitative variable that takes on a value of 1 if a particular condition is true and 0 if that condition is false.






41. In using the method of com parables - the value of a price mul-tiple for the comparison asset; when we have com-parison assets (a group) - the mean or median value of the multiple for the group of assets.






42. A method of estimating VAR that uses data from the returns of the portfolio over a recent past period and compiles this data in the form of a histogram.






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






44. The amount at which an asset or liability is valued for tax purposes.






45. The analyst'S estimate of a stock's value at a particular point in the future .






46. 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






47. The sum of all values in a distribution or dataset - divided by the number of values summed; a synonym of arithmetic mean.






48. A variation of a straddle in which the put and call have different exercise prices.






49. With reference to the cash flow statement - a format for the presentation of the statement in which cash flow from operat-ing activities is shown as operating cash receipts less operating cash disburseme ts.






50. The application of a set of criteria to reduce a set of potential investments to a smaller set having certain desired characteristics.