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Test your basic knowledge |
CFA Level2 Vocab
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Subjects
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certifications
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cfa
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
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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. The quality of being relatively unaffected by a violation of assumptions.
Trimmed mean
Reverse stock split
Robust
Liruit move
2. The expected return on equi-ties minus the risk-free rate; the premium that investors demand for investing in equities.
Company fundamental factors
Corporate raider
Equity risk premium
Owners' equity
3. Futures contracts in which the underlying is a stock - bond - or currency.
Historical simulation (or back simulation)
LIFO reserve
Financial futures
Tangible assets
4. The mix of debt and equity that a company uses to finance its business; a company's specific mixture of long-term financing.
Sales-type lease
Present value model or discounted cash flow model
Trailing P/E (or current PIE)
Capital structure
5. Amounts owed by a business to credi-tors as a result of borrowings that are evidenced by (short-term) loan agreements. n-Period moving average The average of the current and immediately prior n - 1 values of a time series.
Notes payable
Cumulative distribution function
Marketability discount
Standard cost
6. An estimate of the equity risk pre-mium that is based upon estimates provided by a panel of finance experts.
Net operating assets
Lockbox system
Present (price) value of a basis point (PVBP)
Survey approach
7. The probabili ty that a confi-dence interval ind udes the unknown population parameter.
Market risk
Degree of confidence
Tie-in sales
Serially correlated
8. Hirschman Index A measure of rna ket concentration that is calculated by summing the squared mar et shares for competing companies in an industry; high HHI readings or mergers that would result in large HHI increases are more likely to result in regu
Initial margin requirement
Deliveryoption
Her rmdahl-
Leveraged buyout (LBO)
9. Probabilities that generally do not vary from person to person; includes a pri-ori and objective probabilities.
Winsorized mean
Objective probabilities
Active risk
Population mean
10. With reference to statistical inference - astatement about one or more populations.
Pull on liquidity
Hypothesis
Accrued expenses (accrued liabilities)
Private sector surplus or deficit
11. A result in probability theory stating that inconsistent probabilities create profit opportunities.
Percentage-of-completion
Dutch Book theorem
Takeover premium
Performance measurement
12. A descriptive measure computed from or used to describe a population of data - convention-ally represented by Greek letters.
Payables turnover
Contango
Parameter
Hedging
13. An offset to revenue reflecting any cash refunds - credits on account - and discounts from sales prices given to cus-tomers who purchased defective or unsatisfactory items.
Long-term contract
Consolidation
Sales returns and allowances
Corporation
14. Segment revenue divided by seg-ment assets .
Leading
Segment turnover
Sample variance
Unconditional probability (or marginal probability)
15. The mix of a company's variable costsand fixed costs.
Normal distribution
Discrete random variable
Single-step format
Cost structure
16. FRA A contract in which the initial value is intentionally set at a value other than zero and therefore requires a cash payment at the start from one party to the other.
Venture capital investors
Off-market
Bayes' formula
Accounting risk
17. An option strategy involving the purchase of two calls and one put.
Strap
Logit model
Optimizer
Relative strength (RSTR) indicators
18. The autocorrelation of the error term.
Hypothesis
Error autocorrelation
Sampling
Market approach
19. The return that aninvestor earns during a specified holding period;holding period re turn with reference to a fixed-income instuument.
Holding period yield (HPy)
Projected unit credit method
Factor
Installment method (installment-sales method)
20. The income tax owed by the company on the basis of taxable income.
Linear trend
Income tax payable
Defensive interval ratio
Joint probability
21. The ability to react and adapt to financial adversities and opportunities.
Accrual basis
Financial flexibility
Clearinghouse
Future value (FV)
22. 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
Price relative
No-growth company
Futures contract
Deep in the money
23. A level of inventory beyond anticipated needs that provides a cushion in the event that it takes longer to replenish inventory than expected or in the case of greater than expected demand.
Current exchange rate
Underlying earnings (or persistent earnings - continu-ing earnings - or core earnings)
LIFO reserve
Safety stock
24. The Eurodollar rate at which London banks lend dollars to other London banks; considered to be the best representative rate on a dollar borrowed by a private - high-quality borrower.
London Interbank Offer Rate (LIBOR)
Addition rule for probabilities
Heteroskedasticity-consistent standard errors
Technical indicators
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.
Credit-linked notes
Exports
Clean surplus relation
Mean reversion
26. Uncorrelated; at a right angle.
Conventional cash flow
Orthogonal
Going-concern value
Covered call
27. The difference between the yield on a bond and the yield on a default-free security - usu-ally a government note - of the same maturity. The yield spread is primarily determined by the mar-ket's perception of the credit risk on the bond.
Operating activities
Yield spread
Power of a test
Bond-equivalent yield
28. Common sharehold-ers' equity minus intangible assets from the bal-ance sheet - divided by the number of shares outstanding.
Binomial tree
Poison puts
Tangible book value per share
Liquidity ratios
29. The price multiple for a stock assumed to hold at a stated future time.
Statistic
Agency relationships
Terminal price multiple
Working capital
30. Approach that values a private company based on the values of the underlying assets of the entity less the value of any related liabilities.
Enterprise value multiple
Asset-based approach
Initial public offering (IPO)
Divestiture
31. An option strategy involving the purchase of one option and sale of another option that is identical to the first in all respects except either exercise price or expiration.
Interval
Current account
Spread
Stock grants
32. The number of successes in n Bernoulli trials for which the probability of success is constan t for all trials and the trials are independent.
Binomial random variable
Contingent consideration
Estimation
Direct write-off method
33. A merger involving companies at different positions of the same production chain; for example - a supplier or a distributor.
Vertical merger
Traditional efficient markets formulation
Likelibood
Hypothesis testing
34. The value to a specific buyer - tak-ing account of potential synergies based on the investor's requirements and expectations.
Investment value
Dilution
Creditworthiness
Retail method
35. A valuation that sums the estimated values of each of a company's busi-nesses as if each business were an independent going concern.
Carrying amount (book value)
Sum-of-the-parts valuation
Losses
Multivariate normal distribution
36. A statistical test for differ-ences based on paired observations drawn from samples that are dependent on each other.
Balance sheet ratios
Paired comparisons test
Robust
Laddering strategy
37. Valuation measures and other factors related to share price or the trading characteristics of the shares - such as earn-ings yield - dividend yield - and book-to-market value.
Target semivariance
Periodic rate
Company share-related factors
Sample variance
38. A scheme of measuring differ-ences. The four types of measurement scales are nominal - ordinal - interval - and ratio.
Exercise or exercising the option
Defined-contribution pension plans
Agency costs
Measurement scales
39. The amount of income earned during a period per share of common stock.
Earnings per share
Investment strategy
Effective annual yield (EAY)
Income tax paid
40. The process by which options and other derivatives are priced by treating investors as though they were risk neutral.
Current taxes payable
Supernormal growth
Required rate of return
Risk-neutral valuation
41. An investment strategy in which an investor constructs a portfolio to mirror the per-formance of a specified index.
Indexing
Combination
Mode
Target capital structure
42. Momentum indicators based on price.
Risk premium
Arithmetic mean
Standard cost
Technical indicators
43. The net amount of cash provided from operating activities.
Reporting unit
Intangible assets
Cash flow from operations (cash flow from operating activities or operating cash flow)
Segment ROA
44. The most frequently occurring value in a set of observations.
Mode
Dividend discount model (DDM)
Cash
Estimate
45. An option that allows the holder to buy (if a call) or sell (if a put) an underlying cur-rency at a fixed exercise rate - expressed as an exchange rate.
Residual income method (or excess earnings method)
Nominal exchange rate
Currency option
Inverse floater
46. Desired investment outcomes; includes risk objectives and return objectives.
Investment objectives
Measurement scales
Asset-based loan
Cross-sectional data
47. 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.
Box spread
Diluted shares
Modified duration
Bull spread
48. The value derived using a sum-of-the-parts valuation.
Short
Breakup value or private market value
Enterprise value multiple
Statistically significant
49. The day that the company actually mails out (or electronically transfers) a dividend payment.
Lemons problem
Target company - or target
Surprise
Payment date
50. The expected value (the probability-weighted average) of squared deviations from a random variable's expected value.
Free cash flow to the
Variance
Positive serial correlation
PEG ratio