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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. A number between 0 and 1 describing the chance that a stated event will occur.






2. A measure of the sensitivity of a bond's yield to a general measure of bond yields in the market that is used to refine the hedge ratio.






3. An option strategy that combines two bull or bear spreads and has three exercise prices.






4. Making forecasts - estimates - or judgments about a larger group from a smaller group actually observed; using a sample statistic to infer the value of an unknown population parameter.






5. A legal contract specifYing the terms of a bond issue.






6. An estimate of the country spread (country equity premium) for a develop-ing nation that is based on a comparison of bonds yields in country being analyzed and a developed country. The sovereign yield spread is the differ-ence between a government bo






7. The goods and sernces that we buy from people in other countries.






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






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






10. With reference to statistical infer-ence - the subdivision dealing with the testing ofhypotheses about one or more populations.






11. The setting of overall policies and standards in risk management






12. Each component call option in a cap.






13. The mix of debt and equity that a company uses to finance its business; a company's specific mixture of long-term financing.






14. The income tax expected to be recovered - from the taxing authority - on the basis of taxable income. It is a recovery of previ-ously remitted taxes or future taxes owed by the company.






15. An investment where the investor exerts control over the investee - typically by having a greater than 50 percent ownership in the investee.






16. A complete pass through the steps of a simula tion .






17. Private equity investors in development-stage companies.






18. A transaction in which a company buys back its own shares. Unlike stock dividends and stock splits - share repurchases use corporate cash.






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






20. The principle that dol-lar amounts indexed at the same point in time are additive.






21. An acquisition in which the acquirer gives the target company's shareholders some combination of cash and securities in exchange for shares of the target company's stock.






22. With respect to financial statement analy-sis - the ability of a company to fulfill its long-term obligations.






23. An estimate of the cost of common equity that is produced by summing the before-tax cost of debt and a risk premium that captures the additional yield on a company's stock relative to its bonds. The addi-tional yield is often estimated using historic






24. Diminishment in value as a result of car-rying (book) value exceeding fair value and/or recoverable value.






25. The after-tax net operating profits as a percent of total assets or capital.






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






27. A finance perspective on capital markets that deals with the relationship of price to intrinsic value. The traditional efficient mar-kets formulation asserts that an asset's price is the best available estimate of its intrinsic value. The rational ef






28. A strategic corporate goal repre-senting the long-term proportion of earnings that the company intends to distribute to shareholders as dividends.






29. A pre-offer takeover defense mechanism that makes it prohibitively costly for an acquirer to take control of a target without the prior approval of the target's board of directors.






30. The currency in which finan-cial statement amounts are presented.






31. Options originally created with expirations of sev-eral years.






32. Debt or equity financial assets bought with the inten-tion to sell them in the near term - usually less than three months; securities that a company intends to trade.






33. A yield on a basis comparable to the quoted yield on an interest-bearing money market instrument that pays interest on a 360-<iay basis; the annualized holding period yield - assuming a 360-<iay year.






34. A general strategy usually thought of as reducing - if not eliminating - risk.






35. An intangible asset that represents the excess of the purchase price of an acquired com-pany over the value of the net assets acquired.






36. A balance sheet liability that arises when a deficit amount is paid for income taxes relative to accounting profit. The taxable income is less than the accounting profit and income tax payable is less than tax expense. The company expects to eliminat






37. A financial covenant made in conjunction with existing debt that restricts a company's ability to incur additional debt at the same seniority based on one or more financial tests or conditions.






38. A linear regression model with two or more independent variables.






39. All changes in equity other than contributions by - and distributions to - own-ers; income under clean surplus accounting; includes all changes in equity during a period except those resulting from investments by own-ers and distributions to owners;






40. An approach to managing inve tory based on expected demand and the predictability of demand; the ordering point for new inventory is determined based on the costs of ordering and carrying inventory - such that the total cost associated with inventory






41. A form of centralized risk management that typically encompasses the man-agement of a broad variety of risks - ind uding insuran -ce risk.






42. A loan in which the interest rate is reset at least once after the starting date.






43. The amount by which the takeover price for each share of stock must exceed the current stock price in order to entice shareholders to relinquish control of the com-pany to an acquirer.






44. 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






45. 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.






46. The ratio of the percentage change in net income to the percent-age change in operating income; the sensitivity ofthe cash flows available to owners when operating income changes.






47. The portion of an entity's income that is subject to income taxes under the tax laws of its jurisdiction.






48. The annual percentage change in real CDP.






49. A type of non-audited financial statements; typically provide an opinion letter with representations and assurances by the reviewing accountant that are less than those in audited financial statements.






50. A poison pill takeover defense that gives target company shareholders the right to purchase shares of the acquirer at a significant discount to the market price - which has the effect of causing dilution to all existing acquiring com-pany shareholder