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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. Analysis that shows the range of possible outcomes as specific assumptions are changed.






2. A swap in which each party makes ayments to the other in different currenmes.






3. A corporate transac-tion in which management repurchases all out-standing common stock - usually using the proceeds of debt issuance.






4. Historical beta adjusted to reflect the tendency of beta to be mean reverting.






5. The risk that a financial instrument cannot be purchased or sold without a significant concession in price due to the size of the market.






6. The graphical representation of a model of asset price dynamics in which - at each period - the asset moves up wi t probability p or down with probability (I - p).






7. A limit move in the futures market in which the price at which a transaction would be made is at or above the upper limit.






8. The first date that a share trades without (i.e. - 'ex') the dividend.






9. Observations on characteristic(s) of the same observational unit through time.






10. A measure of sensitivity; the incremental change in one variable with respect to an incre-mental change in another variable.






11. The amount at which an asset or liability is valued for tax purposes.






12. Observations that are depen-dent on each other.






13. Generally - a synonym for revenue; 'sales' is generally understood to refer to the sale of goods - whereas 'revenue' is understood to include the sale of goods or services.






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






15. The feature of a futures contract giv-ing the short the right to make decisions about what - when - and where to deliver.






16. Transactions that are denominated in a currency other than a com-pany's functional currency.






17. The cash flow available to a company's common shareholders after all operat-ing expenses - interest - and principal payments have been made - and necessary investments in working and fixed capital have been made.






18. A strategy in which a position is hedged by making frequent adjustments to the quantity of the instrument used for hedging in relation to the instrument being hedged.






19. 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.






20. 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






21. The positive square root of the sample variance.






22. The minimum rate of return required by an investor to invest in an asset - given the asset's riskiness.






23. A country that during its entire his-tory has borrowed more in the rest of the world than other countries have lent in it.






24. In probability - with reference to an event 5 - the event that 5 does not occur; in eco-nomics - a good that is used in conjunction with another good.






25. An option strategy involving the purchase of two puts and one call.






26. With reference to the presenta-tion of expenses in an income statement - the grouping together of expenses by similar nature - e.g. - all depreciation expenses.






27. The differences between actual and predicted value of time series outside the sample period used to fit the model.






28. A swap in which the notional principal changes according to a for-mula related to changes in the underlying.






29. 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.






30. Projects in which influential managers want the corporation to invest. Often - unfortu-nately - pet projects are selected without undergo-ing normal capital budgeting analysis.






31. Assets that are expected to be consumed or converted into cash in the near future - typically one year or less.






32. R The correlation between the actual and forecasted values of the dependent variable in a regression.






33. An Activity ratio calculated as total revenue divided by average net fixed assets.






34. A stage of growth in which a company typically enjoys rapidly expanding markets - high profit margins - and an abnormally high growth rate in earnings per share.






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






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






37. Revenue after adjustments (e.g. - for estimated returns or for amounts unlikely to be collected).






38. The single-period interest rate for a completely risk-free security if no infla-tion were expected.






39. The risk associated with accounting standards that vary from country to country or with any uncertainty about how certain transac-tions should be recorded.






40. A form of restructuring in which sharehold-ers of the parent company are given shares in a /Jewl y c eated entity in e~change for their shares of the pare ~ company.






41. A merger involving compa-nies that are in unrelated businesses.






42. A transaction executed inthe foreign exchange market in which a currencyis purchased (sold) and a forward contract is sold(purchased) to lock in the exchange rate forfuture delivery of the currency. This transactionshould earn the risk-free rate of t






43. A cost that has already been incurred.






44. The relationship between option price and volatility.






45. In the context of customer receipts - the amount of money that is in transit between pay-ments made by customers and the funds that are usable by the company.






46. A formula that expresses the equivalence or parity of spot and forward rates - after adjusting for differences in the interest rates.






47. A transaction whereby the target company management team converts the target to a privately held company by using heavy borrowing to finance the purchase of the target company's outstanding shares.






48. The market value of a swap.






49. A function giving the probability that a random variable is less than or equal to a specified value.






50. A procedure used primarily in futures markets in which the parties to a contract settle the amount owed daily. Also known as the daily settlement.