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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. 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.






2. In probability - with reference to an event 5 - the event that 5 does not occur; in eco-nomics - a good that is used in conjunction with another good.






3. A company that has similar business risk; usually in the same industry and preferably with a single line of business.






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






5. An approach to investing that typically begins with macroeconomic forecasts.






6. An entity associated with a futures market that act~ as middleman between the con-tracting parties and guarantees to each party the performance of the other.






7. Aka Harmonic mean.






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






9. With reference to regression - the set of variables included in the regression and the regression equation's functional form.






10. A basis for stating an annual yield that annualizes a semiannual yield by dou-bling it.






11. A form of centralized risk management that typically encompasses the man-agement of a broad variety of risks - ind uding insuran -ce risk.






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






13. The price paid to buy an asset.






14. The internal rate of return on a portfol io - taking account of all cash flows.






15. An approach to recognizing credit losses on customer receivables in which the company waits until such time as a customer has defaulted and only then recognizes the loss.






16. A solvency ratio calculated as total debt divided by total debt plus total share-holders ' equi ty.






17. An offset to property - plant - and equipment (PPE) reflecting the amount of the cost of PPE that has been allocated to current and previous accounting periods.






18. Assets and liabili-ties that are not monetary assets and liabilities. Nonmonetary assets include inventory - fixed assets - and intangibles - and nonmonetary liabili-ties include deferred revenue.






19. The original time to maturity on a swap.






20. An option strategy in which a long position in a certain number of options is offset by a short position in a certain number of other options on the same underlying - resulting in a risk-free position.






21. A poison pill takeover defense that gives target company shareholders the right to purchase shares of the acquirer at a significant discount to the market price - which has the effect of causing dilution to all existing acquiring com-pany shareholder






22. An option strategy involving the purchase of two calls and one put.






23. Any rate used in finding the present value of a future cash flow.






24. 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.






25. Fixed-income secuntles in which the holder of the security has the right to withhold payment of the full amount due at matu-ri ty if a credi t even t occurs.






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






27. An attempt to take control of a company through a shareholder vote.






28. 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






29. A forward contract calling for one party to make a fixed interest payment and the other to make an interest pay-ment at a rate to be determined at the contract expiration.






30. The positive square root of semivari-ance (sometimes called semistandard deviation) .






31. An updated probability that reflects or comes after new information.






32. A set of observations on a variable's out-comes in different time periods.






33. Aka marking to market.






34. A method of presentation of accounting transactions in which effects on assets appear at the left and effects on liabilities and equity appear at the right of a central dividing line; also known as T-account format.






35. The official price - designated by the clearinghouse - from which daily gains and losses will be determined and marked to market.






36. The operational flexibility to alter production when demand varies from fore-cast. For example - if demand is strong - a company may profit from employees working overtime or from adding additional shifts.






37. 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.






38. To reduce the value of a future payment in allowance for how far away it is in time; to calcu-late the present value of some future amount. Also - the amount by which an instrument is priced below its face value.






39. With reference to the presen-tation of expenses in an income statement - the grouping together of expenses serving the same function - e.g. - all items that are costs of good sold.






40. An asset's sensitivity to a particular factor; a mea-sure of the response of return to each unit of increase in a factor - holding all other factors constant.






41. The difference between the actual value per share and the no-growth value per share.






42. A model of stock val-uation that views a stock's intrinsic value as the present value of expected future free cash flows to equity.






43. A reduction or discount to value for shares that are not publicly traded.






44. Potential future payments to the seller that are contingent on the achieve-ment of certain agreed on occurrences.






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






46. The strategy a company fol-lows with regard to the amount and timing of div-idend payments.






47. PIE The price-to-earnings ratio that is fair - warranted - or justified on the basis of forecasted fundamentals.






48. Rules for portfolio selection that focus on the risk that portfolio value will fall below some minimum acceptable level over some time horizon.






49. An activity ratio equal to the number of days in the period divided by inventory turnover over the period.






50. A portfolio having factor sensitiv-ities that are matched to those of a benchmark or other portfolio.