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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. Uncertainty with respect to the quantity of goods and services that a company is able to sell and the price it is able to achieve; the risk related to the uncertainty of revenues.






2. Method used under IFRS to estimate the defined benefit obligation; for each period in which employees provide services - they earn a portion of the post-employment bene-fits that the company has promised to pay.






3. A finite set of level sequential cash flows.






4. Cash-settled for-ward contracts - used predominately with respect to foreign exchange forwards.






5. The currency in which finan-cial statement amounts are presented.






6. 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.






7. Generally - a synonym for revenue; 'sales' is generally understood to refer to the sale of goods - whereas 'revenue' is understood to include the sale of goods or services.






8. The tendency of a time series to fall when its level is above its mean and rise when its level is below its mean; a mean-reverting time series tends to re turn to its long-term mean.






9. A financial statement that reconciles the beginning-of-period and end-of-period balance sheet values of shareholders' equity; provides information about all factors affecting shareholders' equity.


10. A stage of growth in which a company typically enjoys rapidly expanding markets - high profit margins - and an abnormally high growth rate in earnings per share.






11. The restatement of financial statement items using a common denominator or reference item that allows one to identify trends and major differences; an example is an income statement in which all items are expressed as a percent of revenue.






12. Forecasted dividends per share over the next year divided by current stock price.






13. An esti-mate of a country's equity risk premium that is based upon the historical averages of the risk-free rate and the rate of return on the market portfolio.






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






15. The divisor in the expression for the value of a perpetuity.






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






17. 1) A contract on an interest rate - whereby at periodic payment dates - the writer of the cap pays the difference between the market interest rate and a specified cap rate if - and only if - this differ-ence is positive. This is equivalent to a strea






18. A sample measure of the degree of a distribution's peakedness.






19. Covering or containing all possible outcomes.






20. A normal operating expense that has been paid in advance of when it is due.






21. An approach to investment analysis and security selection.






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






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






24. The duration without dividing by 1 plus the bond's yield to maturity. The term - named for one of the economists who first derived it - is used to distinguish the calculation from mod-ified duration. See also modified duration.






25. The graph of the capital asset pricing model.






26. A commercial imple-mentation of the residual income concept; the computation of EVA® is the net operating profit after taxes minus the cost of capital - where these inputs are adjusted for a number of items.






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






28. Each component put option in a floor.






29. A contract in which the under-lying asset is oil - a precious metal - or some other commodity.






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






31. A strategy in which a position is hedged by making frequent adjustments to the quantity of the instrument used for hedging in relation to the instrument being hedged.






32. Segment revenue divided by seg-ment assets .






33. The unlevered beta; reflects the business risk of the assets; the asset's systematic risk.






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






35. 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






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






37. An equation describing the expected return on any asset (or portfolio) as a linear function of its beta relative to the market portfolio.






38. A sample measure of the degree of dispersion of a distribution - calculated by dividing the sum of the squared deviations from the sam-ple mean by the sample size minus 1.






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






40. An inventory accounting method that averages the total cost of available inventory items over the total units avail-able for sale.






41. The sum of all values in a distribution or dataset - divided by the number of values summed; a synonym of arithmetic mean.






42. An approach to using price multiples that relates a price multiple to forecasts of fundamentals through a discounted cash flow model.






43. A legal contract specifYing the terms of a bond issue.






44. The portion of the dependent variable that is not explained by the independent vari-able(s) in the regression.






45. With reference to assets - the amount of cash or cash equivalents that would have to be paid to buy the same or an equivalent asset today; with reference to liabilities - the un discounted amount of cash or cash equivalents that would be required to






46. A variation of a straddle in which the put and call have different exercise prices.






47. The difference between operat-ing assets (total assets less cash) and operating lia-bilities (total liabilities less total debt).






48. An option in which the underlying is a bond; primarily traded in over-the-counter markets.






49. The company's total cost of capital in money terms.






50. Nonconvertible - noncallable preferred stock with a specified divi-dend rate that has a claim on earnings senior to the claim of common stock - and no maturity date.






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