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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. The use of inventory as collat-eral for a loan. Though the lender has claim to some or all of the company's inventory - the com-pany may still sell or use the inventory in the ordi-nary course of business.






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






3. The risk associated with the pos-sibility that a payment currently due will not be made.






4. A procedure used in certain deriva-tive transactions that specifies that the long and short parties engage in the equivalent cash value of a delivery transaction.






5. Attempts by management to encourage analysts to forecast a slightly lower number for expected earnings than the analysts would otherwise forecast.






6. A measure of financial lever-age calculated as average total assets divided by average total equity.






7. An activity ratio equal to rev-enue divided by average receivables.






8. A financial covenant made in conjunction with existing debt that restricts a company's ability to incur additional debt at the same seniority based on one or more financial tests or conditions.






9. A solvency ratio calculated as total debt divided by total shareholders' equity.






10. The amount of funds originally invested in a project or instrument; the face value to be paid at maturity.






11. The portion of an entity's income that is subject to income taxes under the tax laws of its jurisdiction.






12. The extent to which a company's operations are predictable with substantial confidence.






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






14. A forecasting approach that involves aggregating the individual company forecasts of analysts into industry fore-casts - and finally into macroeconomic forecasts.






15. The revaluation of a financial asset or liability to its current market value or fair value.






16. The cash flow available to a company's common shareholders after all operat-ing expenses - interest - and principal payments have been made - and necessary investments in working and fixed capital have been made.






17. Observations over individual units at a point in time - as opposed to time-series data.






18. The condition in which supply equals demand.






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






20. The incor-poration of production planning into inventory management. A MRP analysis provides both a materials acquisition schedule and a production schedule.






21. A transaction between two affiliates - an investor company and an associate company such that the investor company records a profit on its income statement. An example is a sale of inven-tory by the investor company to the associate.






22. Division ofnet operating income by an overall capitalization rate to arrive at market value.






23. Essentially - the pur-chase of some asset by the buyer (lessee) that is directly financed by the seller (lessor).






24. The relative price of foreign-made goods and services to U.S. -made goods and services.






25. An electronic payment network available to businesses - individuals - and financial institutions in the United States - U.S. -Territories - and Canada.






26. Amounts owed to the company from parties other than customers.






27. The earnings growth rate in a company's mature phase; an earnings growth rate that can be sustained long term.






28. The excess of assets over liabilities; the residual interest of shareholders in the assets of an entity after deducting the entity's liabilities.

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29. 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.






30. 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.






31. The owners' remaining claim on the company's assets after the liabilities are deducted.






32. The rate of return that must be met fora project to be accepted.






33. Limits imposed by a futures exchange on the price change that can occur from one day to the next.






34. A method of account-ing in which combined companies were portrayed as if they had always operated as a single eco-nomic entity. Called pooling of interests under






35. 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






36. The ratio of the market value of debt and equity to the replacement cost of total assets.

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37. Approach to trans-lating foreign currency financial statements for consolidation in which monetary assets and liabil-ities are translated at the current exchange rate. Nonmonetary assets and liabilities are translated at historical exchange rates (th






38. A model that specifies an asset's intrinsic value.






39. Options that - if exercised - would require the payment of more money than the value received and therefore would not be cur-rently exercised.






40. Aka Harmonic mean.






41. A dividend yield based on the anticipated dividend during the next 12 months.






42. The elimination or phasing out of reg-ulations on economic activity.






43. When assets trans-lated at the current exchange rate are greater in amount than liabilities translated at the current exchange rate. Assets exposed to translation gains or losses exceed the exposed liabilities.






44. The unsold units of product on hand.






45. The variable whose variationabout its mean is to be explained by the regres-sion; the left-hand-side variable in a regressionequation.






46. An accelerated depre-ciation method - i.e. - one that allocates a relativelylarge proportion of the cost of an asset to the early years of the asset's useful life.






47. Projects in which influential managers want the corporation to invest. Often - unfortu-nately - pet projects are selected without undergo-ing normal capital budgeting analysis.






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






49. The government's holding of foreign cun; - e.!}cy.






50. An account that offsets another account.