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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. Netting the market values of all contracts - not just derivatives - between parties.






2. 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.






3. A variation of a forward contract that has essentially the same basic definition but with some additional features - such as a clearing-house guarantee against credit losses - a daily settlement of gains and losses - and an organized electronic or fl






4. A company that has similar business risk; usually in the same industry and preferably with a single line of business.






5. The analysis of the total variability of a dataset (such as observations on the dependent variable in a regression) into components representing different sources of variation; with reference to regression - ANOVA provides the inputs for an F-test of






6. An estimate of the average time that elapses between paying suppliers for materi-als and collecting cash from the subsequent sale of goods produced.






7. 1) A contract on an interest rate - whereby at periodic payment dates - the writer of the cap pays the difference between the market interest rate and a specified cap rate if - and only if - this differ-ence is positive. This is equivalent to a strea






8. The margin requirementon the first day of a transaction as well as on anyday in which additional margin funds must be deposited.






9. Investigation and analysis in support of a recommendation; the failure to exercise due diligence may sometimes result in liability accord-ing to various securities laws.






10. An equation expressing the equiva-lence (parity) of a portfolio of a call and a bondwith a portfolio of a put and the underlying -which leads to the relationship between put andcall prices






11. The absorption of one company by another; two companies become one entity and one or both of the pre-merger companies ceases to exist as a separate entity.






12. A contract calling for the purchase of an individual stock - a stock portfolio - or a stock index at a later date at an agreed-upon price.






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






14. Essentially - the pur-chase of some asset by the buyer (lessee) that is directly financed by the seller (lessor).






15. An accelerated depre-ciation method - i.e. - one that allocates a relativelylarge proportion of the cost of an asset to the early years of the asset's useful life.






16. The error of not rejecting a false null hypothesis.






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






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






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






20. A liquidity ratio calculated as current assets divided by current liabilities.






21. To defer the decision to invest in a future projecn until the outcome of some or all of a current project is known. -Projects are sequenced through time - so that investing iN a project creates the option to invest in future projects.






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






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






24. The rule that the joint probability of events A and B equals the probability of A given B times the probability of B.






25. The probability of an event estimated as a relative frequency of occurrence.






26. An extra return to investors to compensate for lack of a public mar-ket or lack of marketability.






27. A sample measure of the degree of a distribution's peakedness.






28. The sum of the real risk-free interest rate and the inflation premium.






29. 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.






30. The cost to a com pany of issu-ing preferred stock; the dividend yield that a com-pany must commit to pay preferred stockholders.






31. An amount equal to saving minus investment.






32. 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.






33. 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.






34. A country that is lending more to the rest of the world than it is borrowing from it.






35. (No longer allowed under U.S. GAAP or IFRS.)






36. With reference to fundamental factor models - the value of the attribute for an asset minus the average value of the attribute across all stocks - divided by the standard deviation of the attribute across all stocks.






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






38. The party obtaining the use of an asset through a lease.






39. Under U.S. GAAP - a measure used in estimating a defined-benefit pen-sion plan's liabilities - defined as 'the actuarial present value as of a date of all benefits attributed by the pension benefit formula to employee ser-vice rendered prior to that






40. A distribution that specifies the probabilities of a random variable's possible outcomes.






41. The contribution to active risk squared resulting from the portfolio's different-than-benchmark exposures relative to factors specified in the risk model.






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






43. Controlling additional property throughreinvestment - refinancing - and exchanging.






44. The evaluation of risk-adjusted performance; the evaluation of invest-ment skill.






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






46. An intangible that can beacquired singly and is typically linked to specificrights or privileges having finite benefit periods(e.g. - a patent or trademark).






47. A continuous - symmetric prob-ability distribution that is completely described by its mean and its variance.






48. A solvency ratio calculated as total debt divided by total shareholders' equity.






49. The rate at which periodic interest payments are calculated.






50. Regulation that allowsprices to reflect only the actual average cost ofproduction and no monopoly profits.