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Test your basic knowledge |
CFA Level2 Vocab
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certifications
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cfa
Instructions:
Answer 50 questions in 15 minutes.
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study here
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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. Valuation measures and other factors related to share price or the trading characteristics of the shares - such as earn-ings yield - dividend yield - and book-to-market value.
Direct f'mancing lease
Eurodollar
Company share-related factors
Lack of marketability discount
2. The difference between revenue and expenses; what remains after subtracting all expenses (including depreciation - interest - and taxes) from revenue.
Top-down forecasting approach
Net income (loss)
Degree of operating leverage (DOL)
Float
3. A sample measure of degree of asymmetry of a distribution.
Operating cycle
Normal distribution
Sample skewness
Yield beta
4. A model for pncmg futurescontracts in which the futures price is determinedby adding the cost of carry to the spot price.
Relative strength (RSTR) indicators
Pure factor portfolio
Economic value added (EVA)
Cost of carry model
5. The process of valuing long-lived assets at fair value - rather than at cost less accumulated depreciation. Any resulting profit or loss is either reported on the income statement and/or through equity under revaluation surplus.
Revaluation
Histogram
Theta
Depreciation
6. A tool that calculates the contri-bution to real CDP growth of each of its sources.
Parameter
Settlement risk
Growth accounting
Platykurtic
7. The risk associated with interest rates - exchange rates - and equity prices.
Target balance
Homogenization
Market risk
Investment strategy
8. An index fund position cre-ated by combining risk-free bonds and futures on the desired index.
Measure of location
Synthetic index fund
Capital asset pricing model (CAPM)
Guideline public companies
9. With reference to regression errors - errors that are correlated across observations.
Capped swap
Cash flow statement (statement of cash flows)
Sector rotation strategy
Serially correlated
10. The standard deviation of the differ-ences between a portfolio's returns and its bench-mark's returns; a synonym of active risk.
Taxable income
Market approach
Tracking risk
Balance-sheet-based accruals ratio
11. A contract signed by both parties to a merger that clarifies the details of the transaction - including the terms - war-ranties - conditions - termination details - and the rights of all parties.
Definitive merger agreement
Unidentifiable intangible
Financial risk
Neoclassical growth theory
12. Under IFRS - the liability of a defined benefit pension.
Diff swaps
Held-to-maturity investments
NTM P/E
Defined benefit obligation
13. Any rate used in finding the present value of a future cash flow.
Number of days of inventory
Discount rate
Conditional variances
Time value decay
14. A finite set of level sequential cash flows.
Committed lines of credit
Capture hypothesis
Annuity
Floored swap
15. Public-company com-parables for the company being valued.
Statutory merger
Enterprise value multiple
Guideline public companies
Leveraged buyout (LBO)
16. The price paid to buy an asset.
Entry price
Multiple linear regression
Deep out of the money
Nonmonetary assets and liabilities
17. A range that has a given proba-bility that it will contain the population parameter it is intended to estimate.
Confidence interval
Revolving credit agreements
Nondeliverable forwards (NDFs)
Overall capitalization rate
18. A valuation multiple that relates the total market value of all sources of a company's capital (net of cash) to a measure of fundamental value for the entire company (such as a pre-interest earnings measure).
Sell-side analysts
Multiple
Forward integration
Enterprise value multiple
19. The ratio of the percentage change in net income to the percent-age change in operating income; the sensitivity ofthe cash flows available to owners when operating income changes.
Operating activities
Mean excess return
Model specification
Degree of financial leverage (DFL)
20. An approach for estimating a country's equity risk premium. The market rate of return is estimated as the sum of the dividend yield and the growth rate in dividends for a market index. Subtracting the risk-free rate of return from the estimated marke
Temporal method
Estimated (or fitted) parameters
Dividend discount model based approach
Accrued interest
21. A country's record of international trading - borrowing - and lending.
Balance of payments accounts
Dirty surplus items
Uniting of interests method
Exports
22. A dividend yield based on the anticipated dividend during the next 12 months.
Forward dividend yield
Gains
Fixed exchange rate
Proxy statement
23. The proportion of a company's assets that is financed with long-term debt.
Long-term debt-ta-assets ratio
Spin-off
Standard cost
Segment turnover
24. Total company valme (the market value of debt - common equity - and preferred equity) minus the value of cash and investments.
Dirty surplus items
Potential credit risk
Committed lines of credit
Enterprise value (EV)
25. The cost of debt financing to a com-pany - such as when it issues a bond or takes out abank loan.
Cost of debt
Independent variable
Venture capital investors
Quantile (or fractile)
26. 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
Voluntary export restraint
Adjusted R2
Duration
Kurtosis
27. A subset of a larger popula-tion created in such a way that each element of the population has an equal probability of being selected to the subset.
Going-concern value
Simple random sample
Sample standard deviation
Agency costs of equity
28. A weighted average of the after-tax required rates of return on a company's common stock - preferred stock - and long-term debt - where the weights are the fraction of each source of financing in the company's target capital structure.
Weighted-average cost of capital (WACC)
Earnings yield
Annuity due
Lessor
29. A number between - 1 and + 1 that measures the co-movement (linear association) between two random variables.
Correlation
Basic earnings per share (EPS)
Free cash flow method
Number of days of receivables
30. In statistics - a desirable property of esti-mators; an efficient estimator is the unbiased esti-mator with the smallest variance among unbiased estimators of the same parameter.
Sample standard deviation
Inflation premium
Efficiency
Financing activities
31. The condition in which supply equals demand.
Equilibrium
Gross income multiplier (GIM)
Relative frequency
Direct f'mancing lease
32. Debt (fixed-income) securities that a company intends to hold to matu-rity; these are presented at their original cost - updated for any amortization of discounts or pr.emiums.
Special purpose entity (special purpose vehicle or variable interest entity)
World Trade Organization
Held-to-maturity investments
Purchased in-process research and development costs
33. The problem or issue of popu-lation regression parameters that have changed over time.
Parameter instability
Partial regression coefficients or partial slope coeffi-cients
Forward price or forward rate
synunetric information
34. Asset inflows not directly related to the ordi-nary activities of the business.
Growth option or expansion option
Gains
Centralized risk management or companywide risk management
Standard cost
35. Amounts owed to the company from parties other than customers.
Money-weighted rate of return
Market approach
Futures commission merchants (FCMs)
Other receivables
36. An amount equal to saving minus investment.
Private sector surplus or deficit
Yield to maturity
Synthetic call
Segment debt ratio
37. Costs borne by owners to moni tor the management of the company (e.g. - board of director expenses).
Treasury shares
Sample excess kurtosis
Common-size analysis
Monitoring costs
38. Shareholders' equity (total assets minus total liabilities) minus the value of preferred stock; common shareholders' equity.
Book value of equity (or book value)
Income tax payable
Hypothesis testing
Interest rate parity
39. A transaction in which a position in the underlying is protected by buying a put and selling a call with the premium from the sale of the call offsetting the premium from the purchase of the put. It can also be used to protect a floating-rate borrowe
Period costs
Realizable value (settlement value)
Zero-cost collar
Debt rating approach
40. A graph line that describes the combinations of expected return and standard deviation of return available to an investor from combining the optimal portfolio of risky assets with the risk-free asset.
Capital allocation line (CAL)
Sarbanes-Oxley Act
Direct f'mancing lease
Book value equity per share
41. The unsold units of product on hand.
Fixed-rate perpetual preferred stock
Locked limit
Inventory
No-growth value per share
42. Under U.S. GAAP - a measure used in estimating a defined-benefit pen-sion plan's liabilities - defined as 'the actuarial present value as of a date of all benefits attributed by the pension benefit formula to employee ser-vice rendered prior to that
Initial margin requirement
Time value of money
Projected benefit obligation
Vertical analysis
43. EPS) Netincome - minus preferred dividends - divided bythe number of common shares outstanding con-sidering all dilutive securities (e.g. - convertibledebt and options); the EPS that would result if alldilutive securities were converted into commonsh
Differential expectations
Investment value
Diluted earnings per share (diluted
Completed contract
44. Accounting in which some income items are reported as part of stockholders' equity rather than as gains and losses on the income statement; certain items of comprehensive income bypass the income statement and appear as direct adjustments to sharehol
Dirty surplus accounting
Reconciliation
Other post-employment benefits
Growth option or expansion option
45. A capital rationing environment assumes that the company has a fixed amount of funds to invest.
Credit
Capital structure
Capital rationing
Operating breakeven
46. A valuation indicator based on past pdce movement.
Price momentum
No-growth company
Legislative and regulatory risk
Deep out of the money
47. With reference to time-series mod-els - a model in which the growth rate of the time series as a function of time is constant.
Log-linear model
Free cash flow to equity
No-growth value per share
Modified duration
48. A trade in two closely related stocks that involves buying the relatively undervalued stock and selling short the relatively overvalued stock.
Revaluation
Bonding costs
Pairs arbitrage
Opportunity cost
49. The part of the execution step of the portfolio manage-ment process in which investment strategies are integrated with expectations to select a portfolio of assets.
Capitalization rate
Deregulation
Heteroskedastic
Portfolio selection/composition problem
50. The risk of loss caused by a counterparty's or debtor's failure to make a promised payment.
Credit risk or default risk
Continuing residual income
Growth accounting
Decentralized risk management