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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 list of accounts used in an entity's accounting system.






2. Rules for portfolio selection that focus on the risk that portfolio value will fall below some minimum acceptable level over some time horizon.






3. Offering two or more products for sale as a set.






4. Aka Harmonic mean.






5. Describes a distribution that is more peaked than a normal distribution.






6. The ability to react and adapt to financial adversities and opportunities.






7. Individuals or companies b hat execute fu tures transactions for other parties off the exchange.






8. Analysis that shows the changes in key financial quantities that result from given (economic) events - such as the loss of customers - the loss of a supply source - or a catastrophic event; a risk management technique involving examina-tion of the pe






9. A theory of economic growth based on the view that the growth of real GDP per person is temporary and that when it rises above subsistence level - a population explo-sion eventually brings it back to subsistence level.






10. The first date that a share trades without (i.e. - 'ex') the dividend.






11. With respect to double-entry accounting - a credit records increases in liability - owners' equity - and revenue accounts or decreases in asset accounts; with respect to borrowing - the willing-ness and ability of the borrower to make promised paymen






12. Additional margin that must be deposited in an amount sufficient to bring the balance up to the initial margin requirement.






13. Estimate of the aver-age number of days it takes to collect on credit accounts.






14. An offset to revenue reflecting any cash refunds - credits on account - and discounts from sales prices given to cus-tomers who purchased defective or unsatisfactory items.






15. A weighted average of the after-tax required rates of return on a company's common stock - preferred stock - and long-term debt - where the weights are the fraction of each source of financing in the company's target capital structure.






16. A profitability ratio calcu-lated as net income divided by average total assets; indicates a company's net profit generated per dollar invested in total assets.






17. An inventory account-ing method that identifies which specific inventory items were sold and which remained in inventory to be carried over to later periods.






18. Ratios that measure a company's ability to meet its long-term obligations.






19. A contract in which the under-lying asset is oil - a precious metal - or some other commodity.






20. An index fund position cre-ated by combining risk-free bonds and futures on the desired index.






21. 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.






22. A method of accounting for a business combination where the acquirer is required to measure each identifiable asset and liability at fair value. This method was the result ofa joint project of the IASB and FASB aiming at convergence in standards for






23. A quoted interest rate that does not account for compounding within the year.






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






25. The quality of being relatively unaffected by a violation of assumptions.






26. The ratio ofthe percentage change in operating income to the percentage change in units sold; the sensitivity of operating income to changes in units sold.






27. The expected return on equi-ties minus the risk-free rate; the premium that investors demand for investing in equities.






28. The difference between net operating assets at the end and the beginning of the period compared to the average net operating assets over the period.






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






30. A rule explaining the uncon-ditional probability of an event in terms of proba-bilities of the event conditional on mutually exclusive and exhaustive scenarios.






31. The number of indepen-dent observations used.






32. Purchases of one product that are per-mitted by the seller only if the consumer buys another good or service from the same firm.






33. A swap in which the floating rate is the cumulative value of a single unit of currency invested at an overnight rate dur-ing the settlement period.






34. When disbursements are paid tooquickly or trade credit availability is limited -requiring companies to expend funds beforethey receive funds from sales that could cover theliability.






35. An increment or premium to value associated with a controlling ownership interest in a company.






36. The sum of the observations divided by the number of observations.






37. A dividend payout pol-icy under which earnings in excess of the funds necessary to finance the equity portion of com-pany's capital budget are paid out in dividends.






38. A limit move in the futures market in which the price at which a transaction would be made is at or below the lower limit.






39. An offset to property - plant - and equipment (PPE) reflecting the amount of the cost of PPE that has been allocated to current and previous accounting periods.






40. The accuracy with which a company's reported financials reflect its operat-ing performance and their usefulness for forecast-ing future cash flows.






41. The use of fixed costs in operations.






42. A rule that states that the number of years it takes for the level of a variable to double is approximately 70 divided by the annual percent-age growth rate of the variable.






43. The date on which a derivative con-tract expi res.






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






45. The amount by which the takeover price for each share of stock must exceed the current stock price in order to entice shareholders to relinquish control of the com-pany to an acquirer.






46. Options that - if exercised - would result in the value received being worth more than the payment required to exercise.






47. With respect to the format of the income statement - a format that does not subtotal for gross profit (revenue minus cost of goods sold) .






48. Describes a time series whenits expected value and variance are cons tan t andfinite in all periods and when its covariance withitself for a fixed number of periods in the past orfuture is constant and finite in all periods.






49. The periodic investment of a fixed amount of money.






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