SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
Test your basic knowledge |
CFA Level2 Vocab
Start Test
Study First
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. A method for estimating a company's before-tax cost of debt based upon the yield on comparably rated bonds for maturities that closely match that of the company's existing debt.
Index option
Economic order quantity-reorder point
Debt rating approach
Build-up method
2. With reference to a random vari-able - the property of having characteristics such as mean and variance that are not constant through time.
Nonstationarity
Discrintinant analysis
Autoregressive (AR) model
Rational efficient markets formulation
3. The currency in which finan-cial statement amounts are presented.
Pull on liquidity
Cost of goods sold
Gross profit (gross margin)
Presentation currency
4. 1) An agent who executes orders to buy orsell securities on behalf of a client in exchange for a commission. 2) See Futures commission merchants.
Securities offering
Equilibrium
Population variance
Broker
5. The actual return on a debt security if it is held to maturity.
Local currency
Serially correlated
Yield
Profitability ratios
6. In accounting - a liability of uncertain tim-ing or amount.
Provision
Liquidation
Permutation
Marketability discount
7. Describes two time series that have a long-term financial or economic relationship such that they do not diverge from each other without bound in the long run.
Sample variance
Cointegrated
Degrees of freedom (df)
Cost structure
8. The hypothesis to be tested.
Debt with warrants
Null hypothesis
Net income (loss)
Static trade-off theory of capital structure
9. Stan-dard errors of the estimated parameters of a regression that correct for the presence of het-eroskedasticity in the regression's error term.
Interest rate swap
Heteroskedasticity-consistent standard errors
Default risk premium
Long-lived assets (or long-term assets)
10. Regression that models the straight-line relationship between the dependent and independen t variable (s) .
Independent
Linear regression
Versioning
Ope ating profit margin (operating margin)
11. Ratios that measure a company's ability to meet its long-term obligations.
Disbursement float
Information ratio (IR)
Commodity swap
Solvency ratios
12. The risk associated with the pos-sibility that a payment due at a later date will not be made.
Potential credit risk
Stated rate (nominal rate or coupon rate)
Total probability rule
Cost of debt
13. A country's record of international trading - borrowing - and lending.
Weighted mean
Null hypothesis
Valuation allowance
Balance of payments accounts
14. The sum of the real risk-free interest rate and the inflation premium.
Noncurrent
Segment ROA
Nominal risk-free interest rate
Look-ahead bias
15. Options that are far in-the-money.
Grouping by nature
Deep in the money
Trade credit
Sensitivity analysis
16. The portfolio that exploits an arbitrage opportunity.
Generalized least squares
Arbitrage portfolio
Quintiles
Stock purchase
17. A measure of a bond's price sen-sitivity to interest rate movements. Equal to the Macaulay duration of a bond divided by one plus its yield to maturity.
Modified duration
Histogram
Pooled estimate
Securities offering
18. The feature of a futures contract giv-ing the short the right to make decisions about what - when - and where to deliver.
Deliveryoption
Risk-neutral valuation
Available-for-sale investments
Cumulative relative frequency
19. The original time to maturity on a swap.
Single-step format
Tenor
Contra account
Debtor nation
20. Quantiles that divide a distribution into four equal parts.
Vertical analysis
Securities Act of 1933
Pretax margin
Quartiles
21. Income as reported on the income statement - in accordance with prevailing account-ing standards - before the provisions for income tax expense.
Strategic transaction
Homogenization
Nonconventional cash flow
Accounting profit (income before taxes or pretax income)
22. Debt or equity financial assets bought with the inten-tion to sell them in the near term - usually less than three months; securities that a company intends to trade.
Ratio scales
Treasury stock method
Held-for-trading securities (trading securities)
Expanded
23. An investment decision rule that accepts projects or investments for which the IRR is greater than the opportunity cost of capital.
Degree of total leverage
IRR rule
Current cost
Ex-dividend
24. A qualitative-dependent-variable multi-ple regression model based on the logistic proba-bility distribution.
Dirty surplus items
Logit model
Semideviation
Exercise rate or strike rate
25. 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.
Panel data
Bernoulli trial
Account format
Interest rate forward
26. The annual percentage change in real CDP.
Divestiture
Money-weighted rate of return
Equitizing cash
Economic growth rate
27. Activities related to obtaining or repaying capital to be used in the business (e.g. - equity and long-term debt).
Momentum indicators
Allowance for bad debts
Financing activities
Futures exchange
28. A strategic corporate goal repre-senting the long-term proportion of earnings that the company intends to distribute to shareholders as dividends.
Sum-of-the-parts valuation
Covariance matrix
Bottom-up forecasting approach
Target payout ratio
29. Covering or containing all possible outcomes.
Error term
Put-call-forward parity
Net revenue
Exhaustive
30. 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.
Likelibood
Multivariate normal distribution
Tie-in sales
Box spread
31. The risk that a financial instrument cannot be purchased or sold without a significant concession in price due to the size of the market.
Declaration date
LIFO layer liquidation (LIFO liquidation)
Liquidity risk
Binomial tree
32. The rate of return that suppliers ofcapital require as compensation for their contri-bution of capital.
Compiled f'mancial statements
Bear hug
Cost of capital
Ordinary shares (common stock or common shares)
33. 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.
Market risk premium
Growth phase
Orderly liquidation value
asis swap
34. The quoted interest rate per period; the stated annual interest rate divided by the number of compounding periods per year.
Spurious correlation
Principal
Periodic rate
Instability in the minimum-variance frontier
35. A policy regime is one that selects a target path for the exchange rate with interven-tion in the foreign exchange market to achieve that path.
Conventional cash flow
Central limit theorem
Notes payable
Crawling peg
36. The party obtaining the use of an asset through a lease.
LIFO method
Lessee
Molodovsky effect
Bottom-up analysis
37. The difference between the fixed rate on an interest rate swap and the rate on a Trea-sury note with equivalent maturity; it reflects the general level of credit risk in the market.
Swap spread
Grant date
Entry price
ackwardation
38. Is Derivatives in which the payoffs occur if a specific event occurs; generally referred to as options.
Real GDP per person
Longitudinal data
Semideviation
Contingent clain
39. The proportion of a company's assets that is financed with long-term debt.
Target balance
Long-term debt-ta-assets ratio
Frequency polygon
Net realizable value
40. The amount of book value (also called carrying value) of common equity per share of common stock - calculated by dividing the book value of shareholders' equity by the num-ber of shares of common stock outstanding.
Gross profit (gross margin)
Efficient portfolio
Book value equity per share
Pairs arbitrage
41. A forward contract in which the underlying is a foreign currency.
Interest coverage
Currency forward
Project sequencing
Two-sided hypothesis test (or two-tailed hypothesis test)
42. A method of valuing prop-erty based on site value plus current construction costs less accrued depreciation.
Cost approach to value
Number of days of receivables
Price to cash flow
Bargain purchase
43. A solvency ratio calculated as total debt divided by total debt plus total share-holders ' equi ty.
Debt-to-capital ratio
Direct write-off method
Market risk premium
Cheapest to deliver
44. A record of receipts from exports of goods and services - payments for imp<ilrts of goods and services - net income and net transfers received from the rest of the world.
Index amortizing swap
Convenience yield
Look-ahead bias
Current account
45. A method of revenue recog-nition in which the seller does not report anyprofit until the cash amounts paid by the buyer-including principal and interest on any financingfrom the seller-are greater than all the seller'scosts for the merchandise sold.
Cost recovery method
Profitability ratios
Equity options
Cash-generating unit
46. Accounting method in which the only relevant transactions for the financial statements are those that involve cash.
Money market yield (or CD equivalent yield
Cash basis
Goodwill
Break point
47. A measure of the sensitivity of a bond's yield to a general measure of bond yields in the market that is used to refine the hedge ratio.
Yield beta
Terminal price multiple
Duration
Out-of-sample forecast errors
48. A merger or acquisition in which target shareholders are to receive shares of the acquirer's common stock as compensation.
Securities offering
Panel data
Market price of risk
Add-on interest
49. The status of a company in the sense of whether it is assumed to be a going con-cern or not.
Private sector surplus or deficit
Premise of value
Tax risk
Contra account
50. The evaluation of credit risk; the evaluation of the creditworthiness of a borrower o r counterpar ty.
Inventory
Defined benefit obligation
Matching strategy
Credit analysis