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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 multifactor model in which the factors are attributes of stocks or com-panies that are important in explaining cross-sectional differences in stock prices.






2. Estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.






3. An electronic payment network available to businesses - individuals - and financial institutions in the United States - U.S. -Territories - and Canada.






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






5. Any departure of the market price of an asset from the asset's estimated intrinsic value.






6. A perpetual annuity - or a set of never-ending level sequential cash flows - with the first cash flow occurring one period from now.






7. 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.






8. The after-tax net operating profits as a percent of total assets or capital.






9. The margin requirement on any day other than the first day of a transaction.






10. An annuity with a first cash flow that is paid one period from the present.






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






12. Managers who hold portfolios that differ from their benchmark port-folio in an attempt to produce positive risk-adjusted returns.






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






14. Making forecasts - estimates - or judgments about a larger group from a smaller group actually observed; using a sample statistic to infer the value of an unknown population parameter.






15. The day that options are granted to employees; usually the date that compensation expense is measured if both the number of shares and option price are known.






16. A measure of correlation applied to ranked data.






17. Sales price less disposition costs - amortized mortgage loan bal-ance - and capital gains taxes.






18. Probabilities that generally do not vary from person to person; includes a pri-ori and objective probabilities.






19. A variable used to explain the dependen t variable in a regression ; a right-hand-side variable in a regression equation .






20. A transformation that involves sub-tracting the mean and dividing the result by the standard deviation.






21. The value of an asset given a hypothetically complete understand-ing of the asset's investment characteristics; the value obtained if an option is exercised based on current conditions.






22. A measure of financial lever-age calculated as average total assets divided by average total equity.






23. The ratio of gross profi t to revenues.






24. A procedure used in certain deriva-tive transactions that specifies that the long and short parties engage in the equivalent cash value of a delivery transaction.






25. With reference to statisti. cal inference - the subdivision dealing with estimating the value of a population parameter.






26. The time between settlement dates.






27. A balance sheet asset that arises when an excess amount is paid for income taxes relative to accounting profit. The taxable income is higher than accounting profit and income tax payable exceeds tax expense. The company expects to recove r the differ






28. Options that relate to investment deci-sions such as the option to time the start of a proj-ect - the option to adjust its scale - or the option to abandon a project that has begun.






29. Costs of inven tories including costs of purchase - costs of conversion - other costs to bring the inventories to their present location and condition - and the allocated portion of) fixed production overhead costs.






30. A quantitative restriction on the import of a particular good - which specifies the maximum amount that can be imported in a given time period.






31. The owners of a joint venture. Each is active in the management and shares control of the joint venture.






32. Not due to be consumed - converted into cash - or settled within one year after the bal-ance sheet date.






33. In the context of the Treynor-Black model - the portfolio formed by mixing analyzed stocks of perceived nonzero alpha values. This portfolio is ultimately mixed with the passive mar-ket index portfolio.






34. Options on individual stocks; also known as stock options.






35. Promises by the company to pay benefits in the future - other than pension benefits - such as life insurance premiums and all or part of health care insurance for its retirees.






36. In the context of corporate finance - leverage refers to the use of fixed costs within a company's cost structure. Fixed costs that are operating costs (such as depreciation or rent) create operating leverage. Fixed costs that are financial costs (su






37. The original time to maturity on a swap.






38. An amount equal to net taxes minus government expenditure on goods and services.






39. A condition in the futures markets in which the benefits of holding an asset exceed the costs - leaving the futures price less than the spot price.






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






41. A merger in which the company being purchased becomes a subsidiary of the purchaser.






42. PIE (or forward PIE or prospective PIE) A stock's current price divided by the next year's expected earnings.






43. With reference to statistical infer-ence - the subdivision dealing with the testing ofhypotheses about one or more populations.






44. The cost to a com pany of issu-ing preferred stock; the dividend yield that a com-pany must commit to pay preferred stockholders.






45. The amount charged for the delivery of goods or services in the ordinary activities of a business over a stated period; the inflows of eco-nomic resources to a company over a stated period.






46. An operating segment or one level below an operating segment (referred to as a component) .






47. An estimate of the country spread (country equity premium) for a develop-ing nation that is based on a comparison of bonds yields in country being analyzed and a developed country. The sovereign yield spread is the differ-ence between a government bo






48. A measure of an option-free bond's aver-age maturity. Specifically - the weighted average maturity of all future cash flows paid by a security - in which the weights are the present value of these cash flows as a fraction of the bond's price. A measu






49. An option that gives the holder the right to sellan underlying asset to another party at a fixedprice over a specific period of time.






50. With reference to equity investors - investors who seek to invest in high-earnings-growth companies.