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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 potential business combina-tion that is endorsed by the managers of both companies.






2. A probability distribution that specifies the probabilities for a group of related random variables.






3. (No longer allowed under U.S. GAAP or IFRS.)






4. An act passed by the U.S. Con-gress in 1933 that specifies the financial and other significant information that investors must receive when securities are sold - prohibits misrepresenta-tions - and requires initial registration of all public issuance






5. An observation drawn from a uni-form distribution.






6. Assets and liabilities with value equal to the amount of currency con-tracted for - a fixed amount of currency. Examples are cash - accounts receivable - mortgages receiv-able - accounts payable - bonds payable - and mort-gages payable. Inventory is






7. The principles governing equivalence relationships between cash flows with different dates.






8. The principle that the approximate num-ber of years necessary for an investment to double is 72 divided by the stated interest rate.






9. A probability distri-bution for a group of random variables that is completely defined by the means and variances of the variables plus all the correlations between pairs of the variables.






10. A profitability ratio calcu-lated as net income divided by average sharehold-ers' equity.






11. Time thought of as advancing in dis-tinct finite increments.






12. Public-company com-parables for the company being valued.






13. A prof -itabili ty ratio calculated as operating income (i.e. - income before inte est and taxes) divided by revenue.






14. Netting the market values of all derivative contracts between two parties to deter-mine one overall value owed by one party to another in the event of bankruptcy.






15. The company in a merger or acquisition that is being acquired.






16. Segment liabilities divided by segment assets.






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






18. The most recent quarterly dividend multiplied by four.






19. Present obligations of an enterprise aris-ing from past events - the settlement of which is expected to result in an outflow of resources embodying economic benefits; creditors' claims on the resources of a company.






20. A balance sheet organized so as to group together the various assets and liabilities into subcategories (e.g. - current and noncurrent) .






21. Linear regression involv-ing two or more independent variables.






22. The existence of an exact linear relation between two or more independent vari-ables or combinations of independent variables.






23. Depositary Receipt A negotiable certifi -cate issued by a depositary bank that represen ts ownersh ip in a non-U .S. company's deposi ted equity (i.e. - equity held in custody by the deposi-tary bank in the company's home market).






24. A wholly-owned sub-sidiary of a company that is established to provide financing of the sales of the parent company.






25. The estimated fair value of the price multiple - usually based on fore-casted fundamentals or comparables.






26. Method of valu-ing property based on recen t sales prices of simi-lar properties.






27. The perceived ability of the bor-rower to pay what is owed on the borrowing in a timely manner; it represents the ability of a com-pany to withstand adverse impacts on its cash flows.






28. Bias introduced by systemati-cally exclua ing some members of the population according to a particular attribute-for example - the bias introduced when data availability leads to certain observations being excluded from the analysis.






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






30. Commercial and investmentbanks that make markets in derivatives.






31. Total assets minus total liabilities.

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32. 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






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






34. A market index portfolio.






35. A swaption that allows the holder to enter into a swap as the fixed-rate receiver and floating-rate payer.






36. A measurement scale that sorts data into categories that are ordered (ranked) with respect to some characteristic.






37. Revenue after adjustments (e.g. - for estimated returns or for amounts unlikely to be collected).






38. A gain in value caused bychanges in price levels. Monetary liabilities expe-rience purchasing power gains during periods ofinflation.






39. A graphical representa-tion of the expected return and risk of all portfo-lios that can be formed using two assets.






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






41. An estimate of the equity risk pre-mium that is based upon estimates provided by a panel of finance experts.






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






43. A measure of VAR equivalentto the analytical method bu t that refers to the use of delta to estimate the option's price sensitivity.






44. 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.






45. The smallest level of significance at whichthe null hypothesis can be rejected; also called themarginal significance level.






46. An option that gives the holder the right to buy an underlying asset from another party at a fixed price over a specific period of time.






47. A variation of the market approach; considers actual transactions in the stock of the subject private company.






48. With reference to time-series mod-els - a model in which the growth rate of the time series as a function of time is constant.






49. 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.






50. An opportunity to conduct an arbitrage; an opportunity to earn an expected positive net profit without risk and with no net investment of money.