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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 merger or acquisition in which target shareholders are to receive shares of the acquirer's common stock as compensation.






2. A merger involving companies at different positions of the same production chain; for example - a supplier or a distributor.






3. Futures contracts in which the underlying is a traditional agricultural - metal - or petroleum product.






4. A measure of VAR equivalentto the analytical method bu t that refers to the use of delta to estimate the option's price sensitivity.






5. A value at or below which a stated fraction of the data lies.






6. The procedure of drawing a sample to satisfy the definition of a simple ran-dom sample.






7. A principle stating that the pr:obability that A or B occurs (both occur) equals he probabili ty thab A occ rs - plus the probabir ty tha~ B occurs - minus the probabil-ity that both A and B occur.






8. The risk of a change in value between the transaction date and the settlement date of an asset or liability denominated in a for-eign currency.






9. An industry's underlying eco-nomic and technical characteristics.






10. The goods and services that we sell to peo-ple in other countries.






11. The slope coefficients in a multiple regression.






12. The application of a set of criteria to reduce a set of potential investments to a smaller set having certain desired characteristics.






13. The operational flexibility to adjust prices when demand varies from forecast. For example - when demand exceeds capacity - the company could benefit from the excess demand by increasing prices.






14. A financial instrument whose valuede ends on the value of some nderlying asset orfactor (e.g. - a stock price - an interest rate - orexchange rate ).






15. Assets that are expected to bene-fit the company over an extended period of time (usually more than one year).






16. The process of allocating the cost of intangible long-term assets having a finite useful life to accounting periods; the allocation of the amount of a bond premium or discount to the periods remaining until bond maturity.






17. A measure of the expected annual cash flow from the operation of a real estate investment after all expenses but before taxes.






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






19. A model that specifies an asset's intrinsic value.






20. Regulation that seeks to keep the rate of return in the industry at a com-petitive level by not allowing excessive prices to be charged.






21. A range that has a given proba-bility that it will contain the population parameter it is intended to estimate.






22. Shares that were issued and subse-quently repurchased by the company.






23. The market in which the currency of one country is exchanged for the cur-rency of another.






24. When settling a contract - the risk that one party could be in the process of paying the counterparty while the counterparty is declar-ing bankruptcy.






25. The arithmetic mean value of a population; the arithmetic mean of all the obser-vations or values in the population.






26. The error of not rejecting a false null hypothesis.






27. 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.






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






29. A multivariate classification technique used to discriminate between groups - such as companies that either will or will not become bankrupt during some time frame.






30. Uncorrelated; at a right angle.






31. The buyer of a derivative contract. Also refers to the position of owning a derivative.






32. A graphical depic-tion of a company's investment opportunities ordered from highest to lowest expected return. A company's optimal capital budget is found where the investment opportunity schedule inter-sects with the company's marginal cost of capit






33. An interest rate swap in which the notional principal is indexed to the level of interest rates and declines with the level ofinterest rates according to a predefined schedule. This type of swap is frequently used to hedge secu-rities that are prepai






34. A test for conditional het-eroskedasticity in the error term of a regression.






35. An acquisition in which the acquirer gives the target company's shareholders some combination of cash and securities in exchange for shares of the target company's stock.






36. The cash flow that is real-ized because of a decision; the changes or incre-ments to cash flows resulting from a decision or action.






37. An option in which the underlying is a stock index.






38. Analysts who work at brokerages.






39. Describes a time series whenits expected value and variance are cons tan t andfinite in all periods and when its covariance withitself for a fixed number of periods in the past orfuture is constant and finite in all periods.






40. An intangible that can beacquired singly and is typically linked to specificrights or privileges having finite benefit periods(e.g. - a patent or trademark).






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






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






43. A series of call options on an interest rate - with each option expiring at the date on which the floating loan rate will be reset - and with each option having the same exercise rate. A cap in general can have an underlying other than an interest ra






44. Costs that remain at the same level regardless of a company's level of production and sales.






45. A variation of a forward contract that has essentially the same basic definition but with some additional features - such as a clearing-house guarantee against credit losses - a daily settlement of gains and losses - and an organized electronic or fl






46. With respect to double-entry accounting - a credit records increases in liability - owners' equity - and revenue accounts or decreases in asset accounts; with respect to borrowing - the willing-ness and ability of the borrower to make promised paymen






47. A probability drawing on per-sonal or subjective judgment.






48. PIE PI Es based on normalized EPS data.






49. A random variable for which the range of possible outcomes is the real line (all real numbers between (-00 and +(0) or some subset of the real line.






50. Financial ratios involving bal-ance sheet items only.