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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. An exchange rate is deter-mined by demand and supply with no direct inter-vention in the foreign exchange market by the central bank.






2. The naturalloga-rithm of 1 plus the holding period return - or equivalently - the natural logarithm of the ending price over the beginning price.






3. A factor related to the econ-omy - such as the inflation rate - industrial produc-tion - or economic sector membership. acroeconomic factor model A multifac tor model in which the factors are surprises in macroeco-nomic variables that significan tly






4. Factors that affect the average returns of a large number of different assets.






5. The part of the execution step of the portfolio management process that involves the implementation of port-folio decisions by trading desks.






6. Investing on the basis of dif-ferential expectations.






7. The most recent quarterly dividend multiplied by four.






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






9. The characteristic of minimum-variance frontiers that they are sensitive to small changes in inputs.






10. A bank commitment to extend credit up to a pre-specified amount; the commitment is considered a short-term liability and is usually in effect for 364 days (one day short of a full year).






11. The present value of an investment's cash inflows (benefits) minus the present value of its cash outflows (costs).






12. Interest earned but not yet paid.






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






14. An approach to valuation that involves using a price multiple to evaluate whether an asset is relatively fairly valued - rela-tively undervalued - or relatively overvalued when compared to a benchmark value of the multiple.






15. A measure of correlation applied to ranked data.






16. The fixed rate at which the holder of an interest rate option can buy or sell the underlying.






17. With reference to events - the propertythat the probability of one event occurringdepends on (is related to) the occurrence ofanother event.






18. The positive square root of the sample variance.






19. 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.






20. A method for accounting forthe effect of convertible securities on earnings pershare (EPS) that specifies what EPS would havebeen if the convertible securities had been con-verted at the beginning of the period - taking account of the effects of conv






21. The market value of a swap.






22. An option that gives the holder the right to buy an underlying asset from another party at a fixed price over a specific period of time.






23. 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.






24. The expected value of a stated event given that another event has occurred.






25. 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.






26. An option strategy that combines a bull spread and a bear spread having two differentexercise prices - which produces a risk-free payoffof the difference in the exercise prices.






27. When a company is acquired and the purchase price is less than the fai r value of the net assets. The current treatment of the excess of fair value over the purchase price is diffe re t under IFRS and U.S. CAAP. The excess is never accounted for as n






28. Method of accounting in which the effect of transactions on financial condition and income are recorded when they occur - not when they are settled in cash.






29. Selling a product in slightly altered forms to different groups of consumers.






30. A continuous - symmetric prob-ability distribution that is completely described by its mean and its variance.






31. An activity ratio calculated as revenue divided by average total assets.






32. A merger in which the company being purchased becomes a subsidiary of the purchaser.






33. A bias caused by using information that was not available on the test date.






34. Segment profit (loss) divided by seg-ment assets.






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






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






37. The sample autocorrela-tions of the residuals.






38. A multifactor model in which the factors are attributes of stocks or com-panies that are important in explaining cross-sectional differences in stock prices.






39. An amount or percentage deducted from the value of an owner-ship interest to reflect the relative absence ofmarketability.






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






41. The time between settlement dates.






42. The risk of a change in value of a n asset or liability denomi-nated in a foreign currency due to a change in exchange rates.






43. A time series regressed on its own past values - in which the independent vari-able is a lagged value of the dependent variable.






44. A legal entity with rights similar to those of a person. The chief officers - executives - or top managers act as agents for the firm and are legally entitled to authorize corporate activi-ties and to enter into contracts on behalf of the business.






45. Deliberate activity aimed at influencing reporting earnings numbers - often with the goal of placing management in a favorable light; the opportunistic use of accruals to manage earnings.






46. Dummy variables used as dependent variables rather than as inde-pendent variables.






47. A list of accounts used in an entity's accounting system.






48. Very liquid short-tenn investments - usually maturing in 90 days or less.






49. Income approach that estimates the value of all intangible assets of the business by capitalizing future earnings in excess of the estimated return requirements associated with working capital and fixed assets.






50. Company growth in output or sales that is achieved by making investments internally (i.e. - excludes growth achieved through mergers and acquisitions).







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