SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
Test your basic knowledge |
CFA Level2 Vocab
Start Test
Study First
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 procedure for determining the interest on a bond or loan in which the interest is added onto the face value of a contract.
Expanded
Economic growth rate
Surprise
Add-on interest
2. The quoted interest rate per period; the stated annual interest rate divided by the number of compounding periods per year.
Conditional expected value
Control premium
Periodic rate
Intergenerational data mining
3. A measure of a bond's price sen-sitivity to interest rate movements. Equal to the Macaulay duration of a bond divided by one plus its yield to maturity.
Derivatives dealers
Modified duration
Working capital turnover
Direct debit program
4. The share price at a particular point in the future.
Posterior probability
Terminal share price
Mixed offering
Simple interest
5. Future benefits promised to the employee regardless of continuing service. Bene-fits typically vest after a specified period of service or a specified period of service combined with age.
Fiduciary call
Days of sales outstanding (DSO)
Vested benefits
Accrual basis
6. A method of account-ing in which combined companies were portrayed as if they had always operated as a single eco-nomic entity. Called pooling of interests under
Uniting of interests method
Target capital structure
Bonding costs
Type II error
7. A statistical model used to clas-sifY borrowers according to creditworthiness.
Bundling
Straddle
Paired observations
Credit scoring model
8. Income rate that reflects the relationship between equity income and equity capital.
Share-the-gains - share-the-pains theory
Winsorized mean
Amortization
Equity dividend rate
9. In reference to short-term cash man-agement - an investment strategy characterized by monitoring and attempting to capitalize on mar-ket conditions to optimize the risk and return relationship of short-term investments.
Underlying
Active strategy
Prior probabilities
Differentiation
10. With reference to regression - the set of variables included in the regression and the regression equation's functional form.
Treasury shares
Bond-equivalent basis
Multiple linear regression model
Model specification
11. The difference between the actual value per share and the no-growth value per share.
Tangible book value per share
Degree of operating leverage (DOL)
Present value of growth opportunities (or value of growth)
Market price of risk
12. The day that the corporation issues a statement d eclaring a specific dividend.
Declaration date
Abandonment option
Empirical probability
Expectational arbitrage
13. An attempt to take control of a company through a shareholder vote.
Capital asset pricing model (CAPM)
Roy's safety first criterion
Proxy fight
Income tax paid
14. The graph of the capital asset pricing model.
Plain vanilla swap
Spurious correlation
Quick ratio - or acid test ratio
ecurity market line (SML)
15. A forward contract calling for one party to make a fixed interest payment and the other to make an interest pay-ment at a rate to be determined at the contract expiration.
Forward rate agreement (FRA)
Traditional efficient markets formulation
Null hypothesis
Accrued interest
16. A company's operating profit with adjustments to normalize the effects of capital structure.
In-the-money
Capital market line (CML)
Net operating profit less adjusted taxes - or NOPLAT
Breakup value or private market value
17. An amount equal to net taxes minus government expenditure on goods and services.
Price to cash flow
Static trade-off theory of capital structure
Government sector surplus or deficit
Capital account
18. A method of revenue recognition in which - in each accounting period - the company estimates what percentage of the contract is complete and then reports that per-centage of the total contract revenue in its income statement.
Active risk
Hostile transaction
Percentage-of-completion
Earnings at risk (EAR)
19. An extra return that compensates investors for the increased sensitivity of the mar-ket value of debt to a change in market interest rates as maturity is extended.
Diminishing balance method
Liquidity
Maturity premium
Expectational arbitrage
20. An active investment strategy whereby the timing of cash outflows is not matched with investment maturities.
Horizontal merger
Long-term equity anticipatory securities (LEAPS)
Mismatching strategy
Solvency ratios
21. A variation of VAR that reflects the risk of a company's earnings instead of its market value.
Production-flexibility
Earnings at risk (EAR)
Up transition probability
Estimation
22. The ratio ofthe percentage change in operating income to the percentage change in units sold; the sensitivity of operating income to changes in units sold.
Discount rate
Degree of operating leverage (DOL)
Tree diagram
Cost of equity
23. A pre-offer takeover defense mech-anism involving the corporate charter (e.g. - stag-gered boards of directors and supermajority provisions) .
Shark repellents
Tax base (tax basis)
Interest rate forward
Qualifying special purpose entities
24. A dividend payout pol-icy under which earnings in excess of the funds necessary to finance the equity portion of com-pany's capital budget are paid out in dividends.
Buy-side analysts
American option
Residual dividend approach
Current liabilities
25. An approach to using price multiples that relates a price multiple to forecasts of fundamentals through a discounted cash flow model.
Method based on forecasted fundamentals
Tangible assets
Shark repellents
Settlement period
26. Aka marking to market.
Daily settlement
Tangible assets
Unidentifiable intangible
Investing activities
27. A valuation indicator based on past pdce movement.
Mesokurtic
Price momentum
Manufacturing resource planning (MRP)
Strip
28. The ratio of a stock's market price to some m asure of va ue per share.
Scaled earnings surprise
Spread
American
Price multiple
29. The difference between reported earnings per share and expected earnings per share.
Unexpected earnings (also earnings surprise)
Platykurtic
Profitability ratios
Potential credit risk
30. A poison pill provision that allows for the redemption or cancellation of a poi-son pill provision only by a vote of coNtinuing directors (generally directors who were on the tar-get company's board p rior to the takeover attempt) .
Nontariff barrier
Optimal capital structure
Expensed
Dead-hand provision
31. The cost to a com pany of issu-ing preferred stock; the dividend yield that a com-pany must commit to pay preferred stockholders.
Total invested capital
Upstream
Monetary assets and liabilities
Cost of preferred stock
32. A business owned and operated by a single person.
Relative dispersion
Down transition probability
Split-rate
Sole proprietorship
33. The number of shares that target stockholders are to receive in exchange for each of their shares in the target company.
Payables turnover
Exchange ratio
Cost of goods sold
Vega
34. A form of restructuring in which sharehold-ers of a parent company receive a proportional number of shares in a new - separate entity; share-holders end up owning stock in two different companies where there used to be one.
Spin-off
Cash conversion cycle (net operating cycle)
Mixed factor models
Stock grants
35. Increases in economic benefits in the form of inflows or enhancements of assets - or decreases of liabilities that result in an increase in equity (other than increases resulting from contribu-tions by owners) .
Income
Parameter
Capital structure
Geometric mean
36. Limits imposed by a futures exchange on the price change that can occur from one day to the next.
Price limits
Captive rmance subsidiary
Null hypothesis
Credit spread option
37. 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.
Basic earnings per share (EPS)
Standard deviation
Single-step format
Winsorized mean
38. The initial issuance ofcommon stock registered for public trading by a formerly private corporation.
Initial public offering (IPO)
Descriptive statistics
Total asset turnover
Equity swap
39. A form of centralized risk management that typically encompasses the man-agement of a broad variety of risks - ind uding insuran -ce risk.
Interest coverage
Enterprise risk management
Residual claim
Mark-ta-market
40. Individuals or companies b hat execute fu tures transactions for other parties off the exchange.
Convenience yield
Futures commission merchants (FCMs)
Operating breakeven
Independent and identically distributed (l
41. A measure of sensitivity; the incremental change in one variable with respect to an incre-mental change in another variable.
Investment constraints
Account
Optimizer
Elasticity
42. An attempt to acquire a com-pany against the wishes of the target's managers.
Classified balance sheet
Hostile transaction
Initial public offering (IPO)
Multivariate distribution
43. A variation of a straddle in which the put and call have different exercise prices.
Strangle
Holding period return
Acquiring company - or acquirer
Confidence interval
44. The actual return on a debt security if it is held to maturity.
Modified duration
Manufacturing resource planning (MRP)
Sustainable growth rate
Yield
45. In reference to mergers - it is the savings achieved through the consolidation of operations and elimination of duplicate resources.
Activity ratios (asset utilization or operating efficiency ratios)
Economies of scale
Synthetic index fund
Normal backwardation
46. A function giving the probability that a random variable is less than or equal to a specified value.
Current cost
Look-ahead bias
Currency option
Cumulative distribution function
47. Segment profit (loss) divided by seg-ment assets.
Current taxes payable
Dummy variable
Segment ROA
Other comprehensive income
48. The sum of the sample observations - divided by the sampfe size.
Active investment managers
Historical method
Conditional heteroskedasticity
Sample mean
49. The actual amount paid for income taxes in the period; not a provision - but the actual cash outflow.
Income tax paid
Collar
Degree of operating leverage (DOL)
Corporation
50. The sum of the real risk-free interest rate and the inflation premium.
Proxy fight
Interest rate put
Yield to maturity
Nominal risk-free interest rate