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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. (Aka forward rate agreement)






2. A regression estimation technique that addresses heteroskedasticity of the error term.






3. With respect to the application of the LIFO inventory method - the liquidation of old - relatively low-priced inventory; happens when the volume of sales rises above the volume of recent purchases so that some sales are made from relatively old - low






4. The science of describing - analyzing - and drawing conclusions from data; also - a collection of numerical data.






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






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






7. A specifi-cation of how 'value' is to be understood in the context of a specific valuation.






8. The condition in a financial mar-ket in which two equivalent financial instruments or combinations of financial instruments can sell for only one price. Equivalent to the principle that no arbitrage opportunities are possible.






9. An investment decision rule that states that an investment should be undertaken if its NPV is positive but not undertaken if its NPV is negative.






10. Ratio of sales on credit to the average balance in accounts receivable.






11. A country that is borrowing more from the rest of the world than it is lending to it.






12. Events such that only one can occur at a time.






13. The rule that the joint probability of events A and B equals the probability of A given B times the probability of B.






14. The use of inven-tory as collateral for a loan; similar to a trust receipt arrangement except there is a third party (i.e. - a warehouse company) that supervises the inventory.






15. A valuation ratio calculated as price per share divided by sales per share.






16. Method used to estimate the overall capitalization rate by dividing the sale price of a comparable income property into the net operating income.






17. Stan-dard errors of the estimated parameters of a regression that correct for the presence of het-eroskedasticity in the regression's error term.






18. The stage of growth between the growth phase and the mature phase of a company in which earnings growth typically slows.






19. The contribution to active risk squared resulting from the portfolio's different-than-benchmark exposures relative to factors specified in the risk model.






20. The fair value of the estimated costs to be incurred at the end of a tangible asset's service life. The fair value of the liability is determined on the basis of discounted cash flows.






21. With reference to equity investors - investors who are focused on paying a relatively low share price in relation to earnings or assets per share.






22. The market in which the currency of one country is exchanged for the cur-rency of another.






23. The day that the corporation issues a statement d eclaring a specific dividend.






24. An option strategy that is equiva-lent to a short butterfly spread.






25. A balance sheet that does not show subtotals for current assets and current liabilities.






26. An agreement between two parties in which one party - the buyer - agrees to buy from the other party - the seller - an underlying asset at a later date for a price established at the start of the contract.






27. The market for short-term debt instruments (one-year maturity or less).






28. A form of restructuring in which sharehold-ers of a parent company receive a proportional number of shares in a new - separate entity; share-holders end up owning stock in two different companies where there used to be one.






29. Differences between tax and financial reporting of revenue (expenses) that will not be reversed at some future date. These result in a difference between the company's effective tax rate and statutory tax rate and do not result in a deferred tax item






30. An option on the yield spread on a bond.






31. A hypothesis concern-ing pricing behavior that holds that even though there are only a few firms in an industry - they are forced to price their products more or less com-petitively because of the ease of entry by outsiders. The key aspect of a conte






32. A varia-tion ofVAR that reflects credit risk.






33. Under U.S. GAAP - a measure used in estimating a defined-benefit pen-sion plan's liabilities - defined as 'the actuarial present value as of a date of all benefits attributed by the pension benefit formula to employee ser-vice rendered prior to that






34. Futures contracts in which the underlying is a stock - bond - or currency.






35. An investment where the investor exerts control over the investee - typically by having a greater than 50 percent ownership in the investee.






36. ID) With respect to random variables - the property of ran-dom variables that are independent of each otherbut follow the identical probability distribution.






37. An option in which the underly-ing is an interest rate.






38. The market price of an asset or lia-bility that trades regularly.






39. Systems that capture transaction data at the physical location in which the sale is made.






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






41. An option in which the underlying value equals the exercise price.






42. Segment liabilities divided by segment assets.






43. A person or country has a comparative advantage in an activi ty if that person or country can perform the activity at a lower opportunity cost than anyone else or any other country.






44. The assumption of equal priorprobabilities.






45. A method of accounting for abusiness combination where the acquiring com-pany allocates the purchase price to each assetacquired and liability assumed at fair value. If thepurchase price exceeds the allocation - the excessis recorded as goodwill.






46. With reference to investmentselection processes - an approach that involves selection from all securities within a specified investment universe - i.e. - without prior narrowiNg of the universe on the bas' s of macroeconomj c or overall market consid






47. An estimate of the country spread (country equity premium) for a develop-ing nation that is based on a comparison of bonds yields in country being analyzed and a developed country. The sovereign yield spread is the differ-ence between a government bo






48. With the accounting systems - a formal record of increases and decreases in a specific asset - liability - component of owners' equity - rev-enue - or expense.






49. An amount or percent-age deducted from the pro rata share of 100 per-cent of the value of an equity interest in a business to reflect the absence of some or all of the powers of control.






50. Financial statements that are not accompanied by an auditor's opinion letter.

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