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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. In accounting contexts - cash on hand (e.g. - petty cash and cash not yet deposited to the bank) and demand deposits held in banks and similar accounts that can be used in payment of obligations.






2. An estimate of the cost of common equity that is produced by summing the before-tax cost of debt and a risk premium that captures the additional yield on a company's stock relative to its bonds. The addi-tional yield is often estimated using historic






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






4. Quantiles that divide a distribution into five equal parts.






5. Any action other than a tariff that restricts international trade.






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






7. A variation of the market approach; establishes a value estimate based on the observed multiples from trading activity in the shares of public companies viewed as reasonably comparable to the subject private company.






8. A method of account-ing for joint ventures where the venturer's share of the assets - liabilities - income and expenses of the joint venture are combined on a line-by-line basis with similar items on the venturer's financial statements.






9. A value at or below which a stated fraction of the data lies.






10. The amount of time between check issuance and a check's clearing back against the company's account.






11. The price multiple for a stock assumed to hold at a stated future time.






12. The currency of the country where a company is located.






13. The minimum rate of return required by an investor to invest in an asset - given the asset's riskiness.






14. The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or groups of assets.






15. 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






16. A random variable for which the range of possible outcomes is the real line (all real numbers between (-00 and +(0) or some subset of the real line.






17. Options on individual stocks; also known as stock options.






18. An arrangement whereby a customer authorizes a debit to a demand account; typically used by companies to collect routine pay-ments for services.






19. A mean computed after assigning a stated percent of the lowest values equal to one specified low value - and a stated percent of the highest values equal to one specified high value.






20. The single-period interest rate for a completely risk-free security if no infla-tion were expected.






21. The risk associated with the conversion of foreign financial statements into domestic currency.






22. The risk of loss caused by a counterparty's or debtor's failure to make a promised payment.






23. Securities held by a company with the intent to trade them.






24. 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






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






26. The tendency of a time series to fall when its level is above its mean and rise when its level is below its mean; a mean-reverting time series tends to re turn to its long-term mean.






27. An option strategy involving the purchase of two calls and one put.






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. Serial correlation in which a positive e rror for one observation increases the chance of a negative error for another observation - and vice versa.






30. The risk associated with interest rates - exchange rates - and equity prices.






31. A swap in which the payments are basedon the difference between interest rates in twocountries but payments are made in only a singlecurrency.






32. A form of active strategy which entails scheduling maturities on a systematic basis within the investment portfolio such that invest-ments are spread out equally over the term of the ladder.






33. Making forecasts - estimates - or judgments about a larger group from a smaller group actually observed; using a sample statistic to infer the value of an unknown population parameter.






34. A variation of VAR that reflects the risk of a company's earnings instead of its market value.






35. Costs of inven tories including costs of purchase - costs of conversion - other costs to bring the inventories to their present location and condition - and the allocated portion of) fixed production overhead costs.






36. A theory of economic growth based on the idea that real CDP per person grows because of the choices that people make in the pursuit of profit and that growth can persist indefinitely.






37. The pro-portion of the ownership of a subsidiary not held by the parent (controlling) company.






38. 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.






39. Assets used as benchmarks when applying the method of com parables to value an asset.






40. Huidity When receipts lag - creating pres-sure fmm the decreased available funds.






41. The risk of loss from failures in a company's systems and proce-dures (for example - due to computer failures or human failures) or events completely outside of the control of organizations (which would include 'acts of God' and terrorist actions) .






42. The principle that dol-lar amounts indexed at the same point in time are additive.






43. Company growth in output or sales that is achieved by buying the necessary resources externally (i.e. - achieved through mergers and acquisitions) .






44. When settling a contract - the risk that one party could be in the process of paying the counterparty while the counterparty is declar-ing bankruptcy.






45. The cost of debt financing to a com-pany - such as when it issues a bond or takes out abank loan.






46. Future benefits promised to the employee regardless of continuing service. Bene-fits typically vest after a specified period of service or a specified period of service combined with age.






47. The process of identifYing the level of risk an entity wants - measuring the level of risk the entity currently has - taking actions that bring the actual level of risk to the desired level of risk - and monitoring the new actual level of risk so tha






48. An entity (partnership - corporation - or other legal form) where control is shared by two or more entities called venturers.






49. The relationship between the price of the underlying and an option's exercise price.






50. An option strategy that combines two bull or bear spreads and has three exercise prices.