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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 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.






2. The price received to sell an asset or trans-fer a liability.






3. Aka 'Market efficiency.






4. The analysis of portfolio performance in terms of the contribu-tions from various sources of risk.






5. A trader holding a position open some-what longer than a scalper but closing all posi-tions at the end of the day.






6. Factors related to the company's internal performance - such as factors relating to earnings growth - earnings variability - earnings momentum - and financial leverage.






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






8. A bar chart of data that have been grouped into a frequency distribution.






9. An option strategy that combines a bull spread and a bear spread having two differentexercise prices - which produces a risk-free payoffof the difference in the exercise prices.






10. Next twelve months P/E: current market price divided by an estimated next twelve months EPS.






11. In the context of the weighted average cost of capital (WACC) - a break point is the amount of capital at which the cost of one or more of the sources of capital changes - leading to a change in the WACC.






12. An approach to investing thatfocuses on the individual characteristics of securi-ties rather than on macroeconomic or overall market forecasts.






13. An amount equal to saving minus investment.






14. Rules for portfolio selection that focus on the risk that portfolio value will fall below some minimum acceptable level over some time horizon.






15. Segment liabilities divided by segment assets.






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






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






18. A si gle numerical estimate of an unknown quantity - such as a population parameter.






19. Assets that are expected to provide economic benefits over a future period of time - typically greater than one year.






20. A quantity computed from or used to describe a sample of data.






21. Ratio of sales on credit to the average balance in accounts receivable.






22. Options that - if exercised - would require the payment of more money than the value received and therefore would not be cur-rently exercised.






23. European option An option contract that can only be exercised on its expiration date.






24. 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






25. 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.






26. The number of units produced and sold at which the company's net income is zero (revenues = total costs).






27. A loss in value caused bychanges in price levels. Monetary assets experi-ence purchasing power losses during periods ofinflation.






28. The pro-portion of the ownership of a subsidiary not held by the parent (controlling) company.






29. The return that an investorearns during a specified holding period; a syn-onym for total return.






30. A strategy used to replicate an index. It is also used to take a given amount of cash and turn it into an equity position while maintaining the liquidity provided by the cash.






31. An extra return that compen-sates investors for expected inflation.






32. An attempt to take control of a company through a shareholder vote.






33. ROA) A prof-itability ratio calculated as operating income divided by average total assets.






34. Dummy variables used as dependent variables rather than as inde-pendent variables.






35. An acceler-ated depreciation method that involves depreciat-ing the asset at double the straight-line rate. This rate is multiplied by the book value of the asset at the beginning of the period (a declining balance) to calculate depreciation expense.






36. The loss in the value of an option resulting from movement of the option price toward its payoff value as the expiration day approaches.






37. The sale - liquidation - or spin-off of a d'vi-sion or subsidiary.






38. An activity ratio calculated as revenue divided by average total assets.






39. The most frequently occurring value in a set of observations.






40. Provision for a return of invest-ment - net of value appreciation.






41. A method of revenue recog-nition in which the seller does not report anyprofit until the cash amounts paid by the buyer-including principal and interest on any financingfrom the seller-are greater than all the seller'scosts for the merchandise sold.






42. Said of a sale in which proceeds are to be paid in installments over an extended period of time.






43. Securities held by a company with the intent to trade them.






44. A loan that is secured with com-panyassets.






45. The difference between revenue and expenses; what remains after subtracting all expenses (including depreciation - interest - and taxes) from revenue.






46. Real CDP divided by the population.






47. A procedure by which a population is divided into subpopulations (strata) based on one or more classification criteria. Sim-ple random samples are then drawn from each stratum in sizes proportional to the relative size of each stratum in the populati






48. The risk associated with the pos-sibility that a payment due at a later date will not be made.






49. The fixed rate at which the holder of an interest rate option can buy or sell the underlying.






50. An active investment strategy whereby the timing of cash outflows is not matched with investment maturities.