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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. Financial statements in which all elements (accounts) are stated as a per-centage of a key figure such as revenue for an income statement or total assets for a balance sheet.






2. 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.






3. An estimation formula; the formula used to compute the sample mean and other sample statistics are examples of estimators.






4. Bias introduced by systemati-cally exclua ing some members of the population according to a particular attribute-for example - the bias introduced when data availability leads to certain observations being excluded from the analysis.






5. A theory of economic growth based on the idea that real CDP per person grows because of the choices that people make in the pursuit of profit and that growth can persist indefinitely.






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






7. The expected return on an invest-ment minus the risk-free rate.






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






9. Options that are far in-the-money.






10. A financial covenant made in conjunction with existing debt that restricts a company's ability to incur additional debt at the same seniority based on one or more financial tests or conditions.






11. The risk of loss from failures in a company's systems and proce-dures (for example - due to computer failures or human failures) or events completely outside of the control of organizations (which would include 'acts of God' and terrorist actions) .






12. As used in option pricing - the standard deviation of the continuously compounded returns on the underlying asset.






13. Options that - if exercised - would require the payment of more money than the value received and therefore would not be cur-rently exercised.






14. An activity ratio equal to the number of days in period divided by receivables turnover.






15. 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.






16. A record of receipts from exports of goods and services - payments for imp<ilrts of goods and services - net income and net transfers received from the rest of the world.






17. A poison pill takeover defense that dilutes an acquirer's ownership in a target by giv-ing other existing target company shareholders the right to buy additional target company shares at a discount.






18. The autocorrelation of the error term.






19. Public-company com-parables for the company being valued.






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






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






22. Under IFRS - the liability of a defined benefit pension.






23. Financial ratios measuring the com-pany's ability to meet its short-term obligations.






24. A reduction in the number of shares outstanding with a corresponding increase in share price - but no change to the company's underlying fundamentals.






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






26. The difference between revenue and expenses; what remains after subtracting all expenses (including depreciation - interest - and taxes) from revenue.






27. A method for estimating the betafor a company or project; it requires using a com-parable company's beta and adjusting it for finan-cialleverage differences.






28. A test that is not concerned with a parameter - or that makes minimal assumptions about the population from which a sam Ie comes.






29. The probability of correctly rejecting the null-that is - rejecting the null hypothesis when it is false.






30. When liabilities translated at the current exchange rate are greater than assets translated at the current exchange rate. Liabilities exposed to translation gains or losses exceed the exposed assets.






31. 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.






32. In reference to <wrporate taxes a split-rate system taxes earnings to be distributed as dividends at a different rate than earnings to be retained. Corporate profits distributed as dividends are taxed at a lower rate than those retained in the busine






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






34. (No longer allowed under U.S. GAAP or IFRS.)






35. The residuals from a fitted time-series model within the sample period used to fit the model.






36. A contract calling for the purchase of an individual stock - a stock portfolio - or a stock index at a later date at an agreed-upon price.






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






38. The date on which the parties to a swap make payments.






39. A theory of economic growth that proposes that real CDP per person grows because technological change induces a level of saving and investment that makes capital per hour oflabor grow.






40. Amount that must be set aside each period to have $1 at some future point in time.






41. The positive square root of the sample variance.






42. A trader holding a position open some-what longer than a scalper but closing all posi-tions at the end of the day.






43. With reference to a time series - the underly-ing model generating the times series.






44. A merger involving companies inthe same line of business - usually as competitors.






45. With respect to the format of the income statement - a format that presents a subtotal for gross profit (revenue minus cost of goods sold).






46. The value of the U.S. dollar in terms of other currencies in the foreign exchange market.






47. Valuation approach that values an asset based on pricing multiples from sales of assets viewed as similar to the subject asset.






48. Bias that may result when failed or defunct companies are excluded from member-ship in a group.






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






50. The probability of an event given (conditioned on) another event.