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






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






3. ID) With respect to random variables - the property of ran-dom variables that are independent of each otherbut follow the identical probability distribution.






4. The condition in futures markets in which futures prices are higher than expected spot prices.






5. The lowest possible value of an option.






6. Valuation approach that values an asset as the present discounted value of the income expected from it.






7. The time remaining in the life of a derivative - typically expressed in years.






8. A trend in which the dependent vari-able changes at a constant rate with time.






9. Lack of bias. A desirable property of estimators - an unbiased estimator is one whose expected value (the mean of its sampling distri-bution) equals the parameter it is intended to estimate.






10. Earnings per share divided by price; the reciprocal of the PIE ratio.






11. 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






12. In statistics - a desirable property of esti-mators; an efficient estimator is the unbiased esti-mator with the smallest variance among unbiased estimators of the same parameter.






13. The most common type of commun-size analysis - ill which the accounts in a given period are compared to a benchmark item in that same year.






14. A floating-rate note or bond in which the coupon is adjusted to move opposite to a benchmark interest rate.






15. A solvency ratio calculated as EBIT divided by interest payments.






16. Research and development costs relating to projects that are not yet completed - such as have been incurred by a company that is being acquired.






17. Asset inflows not directly related to the ordi-nary activities of the business.






18. A swap in which the floating rate is the cumulative value of a single unit of currency invested at an overnight rate dur-ing the settlement period.






19. An agreement between two parties to exchange a series of future cash flows.






20. The condition in a financial mar-ket in which two equivalent financial instruments or combinations of financial instruments can sell for only one price. Equivalent to the principle that no arbitrage opportunities are possible.






21. The difference between reported net income on an accrual basis and the cash flows from operating and investing activities.






22. A measure of VAR equivalentto the analytical method bu t that refers to the use of delta to estimate the option's price sensitivity.






23. For accounting purposes - the exchange rates that existed when the assets and liabilities were initially recorded.






24. The probability of an event given (conditioned on) another event.






25. Investments in which the investor has no signifi-cant influence or control over the operations of the investee.






26. A sample measure of the degree of dispersion of a distribution - calculated by dividing the sum of the squared deviations from the sam-ple mean by the sample size minus 1.






27. Valuation measures and other factors related to share price or the trading characteristics of the shares - such as earn-ings yield - dividend yield - and book-to-market value.






28. A measurement scale that sorts data into categories that are ordered (ranked) with respect to some characteristic.






29. An agreement between two governments in which the government of the exporting country agrees to restrain the volume of its own exports.






30. Netting the market values of all derivative contracts between two parties to deter-mine one overall value owed by one party to another in the event of bankruptcy.






31. The relationship between option price and volatility.






32. 1) An agent who executes orders to buy orsell securities on behalf of a client in exchange for a commission. 2) See Futures commission merchants.






33. The initial issuance ofcommon stock registered for public trading by a formerly private corporation.






34. A public document that provides the material facts concerning matters on which shareholders will vote.






35. The set of rules used to select a sample.






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






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






38. A policy regime is one that selects a target path for the exchange rate with interven-tion in the foreign exchange market to achieve that path.






39. Income rate that reflects the relationship between equity income and equity capital.






40. A market index portfolio.






41. The last in - first out - method of accounting for inventory - which matches sales against the costs of items of inventory in the reverse order the items were placed in inventory (i.e. - inventory produced or acquired last are assumed to be sold firs






42. Debt issued with warrants that give the bondholder the right to purchase equity at prespecified terms.






43. A time series in which the value ofthe series in one period is the value of the series in the previous period plus an unpredictable random error.






44. Approach to trans-lating foreign currency financial statements for consolidation in which monetary assets and liabil-ities are translated at the current exchange rate. Nonmonetary assets and liabilities are translated at historical exchange rates (th






45. The return on an asset in excess of the asset's required rate of return; the risk-adjusted return.






46. A measure of the expected annual cash flow from the operation of a real estate investment after all expenses but before taxes.






47. 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.






48. Cannibalization occurs when an investment takes customers and sales away from another part of the company.






49. The amount to which a payment or series of payments will grow by a stated future date.






50. The revaluation of a financial asset or liability to its current market value or fair value.