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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 sum of market value of common equity - book value of preferred equity - and face value of debt.






2. Ratios that measure a company's ability to generate profitable sales from its resources (assets).






3. Securities held by banks or other financial intermediaries for trading purposes.






4. The condition of being of sufficient importance so that omission or misstatement of the item in a financial report could make a differ-ence to users' decisions.






5. For data grouped into intervals - the fraction of total observations that are less than the value of the upper limit of a stated interval.






6. The rate of return required by suppliers of capital for an individual source of a company's funding - such as debt or equity.






7. A mean computed after assigning a stated percent of the lowest values equal to one specified low value - and a stated percent of the highest values equal to one specified high value.






8. A method for accounting for the effect of options (and warrants) on earnings per share (EPS) that specifies what EPS would have been if the options and warrants had been exercised and the company had used the pro-ceeds to repurchase common stock.






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






10. The combination of puts - the underly-ing - and risk-free bonds that replicates a call option.






11. The difference between reported earnings per share and expected earnings per share.






12. FIrm The cash flow available to the company's suppliers of capital after all operat-ing expenses (including taxes) have been paid and necessary investments in working and fixed capital have been made.






13. The owners' remaining claim on the company's assets after the liabilities are deducted.






14. Assets and liabilities with value equal to the amount of currency con-tracted for - a fixed amount of currency. Examples are cash - accounts receivable - mortgages receiv-able - accounts payable - bonds payable - and mort-gages payable. Inventory is






15. A rate of interest based on the secu-rity's face value.






16. A decision rule for choos-ing between two investments based on their means and variances.






17. The condition in which supply equals demand.






18. A possible value of a random variable.






19. A prof -itabili ty ratio calculated as operating income (i.e. - income before inte est and taxes) divided by revenue.






20. Weights that are used to compute a binomial option price. They are the probabilities that would apply if a risk-neutral investor valued an option.






21. Quantiles that divide a distribution into four equal parts.






22. A method for estimating the betafor a company or project; it requires using a com-parable company's beta and adjusting it for finan-cialleverage differences.






23. A probability distribution that specifies the probabilities for a group of related random variables.






24. 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.






25. Outflows of economic resources or increases in liabilities that result in decreases in equity (other than decreases because of distribu-tions to owners); reductions in net assets associ-ated with the creation of revenues.






26. 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.






27. Factor models that combine features of more than one type of factor model.






28. The official price - designated by the clearinghouse - from which daily gains and losses will be determined and marked to market.






29. 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






30. (Aka forward rate agreement)






31. The risk of a change in value of a n asset or liability denomi-nated in a foreign currency due to a change in exchange rates.






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






33. 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.






34. Momentum indicators based on price.






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






36. 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






37. The hypothesis accepted when the null hypothesis is rejected.






38. Costs borne by owners to moni tor the management of the company (e.g. - board of director expenses).






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






40. An act passed by the U.S. Con-gress in 1933 that specifies the financial and other significant information that investors must receive when securities are sold - prohibits misrepresenta-tions - and requires initial registration of all public issuance






41. With reference to investmentselection processes - an approach that involves selection from all securities within a specified investment universe - i.e. - without prior narrowiNg of the universe on the bas' s of macroeconomj c or overall market consid






42. An agreement between two parties in which one party - the buyer - agrees to buy from the other party - the seller - an underlying asset at a later date for a price established at the start of the contract.






43. A contract in which the under-lying asset is oil - a precious metal - or some other commodity.






44. Forecasted dividends per share over the next year divided by current stock price.






45. Aka marking to market.






46. Expectations that differfrom consensus expectations.






47. 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






48. Aka 'Market efficiency.






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






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







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