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






2. Under U.S. GAAP -a special purpose entity structured to avoid consol-idation that must meet qualification criteria.






3. In reference to corporate taxes - a system that imputes - or attributes - taxes at only one level of taxation. For countries using an imputation tax system - taxes on dividends are effectively levied only at the shareholder rate. Taxes are paid at th






4. Financial ratios measuring the com-pany's ability to meet its short-term obligations.






5. A type of top-down investing approach that involves emphasizing different eco-nomic sectors based on considerations such as macroeconomic forecasts.






6. The risk that failures by company man-agers to effectively manage a company's environ-mental - social - and governance risk exposures will lead to lawsuits and other judicial remedies - resulting in potentially catastrophic losses for the company; th






7. Businesses with high sensitivity to business- or industry-cycle influences.






8. An agreement between two parties to exchange a series of future cash flows.






9. A minimum level of cash to be held available-estimated in advance and adjusted for known funds transfers - seasonality - or other factors.






10. Unsecured short-term corporate debt that is characterized by a single payment at maturity.






11. Costs that fluctuate with the level of production and sales.






12. Carlo simulation method An approach to estimating a probability distribution of outcomes to examine what might happen if particular risks are faced. This method is widely used in the sci-ences as well as in business to study a variety of problems.






13. Describes a distribution that is less peaked than the normal distribution.






14. A solvency ratio measuring the number of times interest and lease payments are covered by operating income - calculated as (EBIT + lease payments) divided by (interest payments + lease payments).






15. Aka 'Market efficiency.






16. Assets less liabilities; the residual interest in the assets after subtracting the liabilities.






17. The process by which options and other derivatives are priced by treating investors as though they were risk neutral.






18. The goods and sernces that we buy from people in other countries.






19. A profitabili ty ratio calcu-lated as EBIT divided by the sum of short-and long-te debt and equi ty.






20. The value of the U.S. dollar expressed in units of foreign currency per U.S. dollar.






21. Ratios that measure how efficiently a company performs day-to-day tasks - such as the collection of receivables and management of inventory.






22. 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.






23. A mean computed after excluding a stated small percentage of the lowest and highest observations.






24. An estimate of the average number of days it takes deposited checks to clear; average daily float divided by average daily deposit.






25. The money of other countries regardless of whether that money is in the form of notes - coins - or bank deposits.






26. A measure of th e yield on the undel~ ing bond of a futures contract implied by pricing it as though the underlying will be delivered at the futures expiration.






27. Each value on a binomial tree from which suc-cessive moves or outcomes branch.






28. A common or underlying element with which several variables are correlated.






29. The uncertainty associated with tax laws.






30. A contract in which one party has the right to claim a payment from another party in the event that a specific credit event occurs over the life of the contract.






31. ROA) A prof-itability ratio calculated as operating income divided by average total assets.






32. All changes in equity other than contributions by - and distributions to - own-ers; income under clean surplus accounting; includes all changes in equity during a period except those resulting from investments by own-ers and distributions to owners;






33. The ability to terminate a proj-ect at some future time if the financial results are disappointing.






34. The error of not rejecting a false null hypothesis.






35. An extra return that compen-sates investors for the risk of loss relative to an investment's fair value if the investment needs to be converted to cash quickly.






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






37. A cost that has already been incurred.






38. Costs associated with the conflict of interest present when a company is managed by non-owners. Agency costs result from the inher-ent conflicts of interest between managers and equity owners.






39. Mutually exclusive proj-ects compete directly with each other. For example - if Projects A and B are mutually exclusive - you can choose A or B - but you cannot choose both. n Factorial For a positive integer n - the product of the first n positive i






40. Approach that values a private company based on the values of the underlying assets of the entity less the value of any related liabilities.






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






42. A series of call options on an interest rate - with each option expiring at the date on which the floating loan rate will be reset - and with each option having the same exercise rate. A cap in general can have an underlying other than an interest ra






43. The day that the company actually mails out (or electronically transfers) a dividend payment.






44. Regression that models the straight-line relationship between the dependent and independen t variable (s) .






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






46. Valuation indi-cators that compare a stock's performance during a period either to its own past performance or to the performance of some group of stocks.






47. The competitive strategy of seeking a compet-itive advantage within a target segment or seg-ments of the industry - either on the basis of cost leadership (cost focus) or differen tiation (differ-entiation focus) .






48. The amount at which an asset or liability is valued according to account-ing principles.






49. The rule that - on the average - with no change in technology - a 1 percent increase in capital per hour of labor brings a 1/3 percent increase in labor productivity.






50. The average rate of return in excess of the risk-free rate.







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