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CFA Level2 Vocab

Subjects : certifications, cfa
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. The difference between reported earnings per share and expected earnings per share.






2. 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.






3. A portfolio having factor sensitiv-ities that are matched to those of a benchmark or other portfolio.






4. A test for conditional het-eroskedasticity in the error term of a regression.






5. Dummy variables used as dependent variables rather than as inde-pendent variables.






6. An approach to investing that typically begins with macroeconomic forecasts.






7. A cost that has already been incurred.






8. The relationship between option price and volatility.






9. A financial instrument that gives one party the right - but not the obligation - to buy or sell an underlying asset from or to another party at a fixed price over a specific period of time. Also referred to as contingent claims.






10. With reference to regression errors - errors that are correlated across observations.






11. In reference to assets - the amount paid to purchase an asset - including any costs of acquisition and! or preparation; with reference to liabilities - the amount of proceeds received in exchange in issuing the liability.






12. Aka 'Market efficiency.






13. A ratio of an ending price over a beginning price; it is equal to 1 plus the holding period return on the asset.






14. A valuation indicator based on past pdce movement.






15. With reference to the presen-tation of expenses in an income statement - the grouping together of expenses serving the same function - e.g. - all items that are costs of good sold.






16. A quantitative measure that specifies where data are centered.






17. The quantity of goods and services that a country exports to pay for its imports of goods and services.






18. 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.






19. The risk associated with accounting standards that vary from country to country or with any uncertainty about how certain transac-tions should be recorded.






20. Members ips in a derivatives exchange.






21. A measurement scale that not only ranks data but also gives assurance that the differ-ences between scale values are equal.






22. Very liquid short-tenn investments - usually maturing in 90 days or less.






23. With reference to the cash flow statement - a format for the presentation of the statement in which cash flow from operat-ing activities is shown as operating cash receipts less operating cash disburseme ts.






24. The interest earned each period on the original investment; interest calculated on the principal only.






25. The probability of a Type I error in testing a hypothesis.






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






27. A general strategy usually thought of as reducing - if not eliminating - risk.






28. A country that is lending more to the rest of the world than it is borrowing from it.






29. A rate of interest based on the secu-rity's face value.






30. The return that aninvestor earns during a specified holding period;holding period re turn with reference to a fixed-income instuument.






31. The average squared deviation below a target value.






32. A transaction in which a company buys back its own shares. Unlike stock dividends and stock splits - share repurchases use corporate cash.






33. A combination of a long cap and a short floor - or a short cap and a long floor. A col-lar in general can have an underlying other than an interest rate.






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






35. A graph of a frequency distri-bution obtained by drawing straight lines join-ing successive points representing the class frequencies.






36. For a give period - equal to begi ning inventory minus entling inventory JDlusthe cost 0 goods auqui red or produced duringthe period.






37. The difference between the market price of the option and its intrinsic value - determined by the uncertainty of the underlying over the remaining life of the option.






38. Netting the market values of all contracts - not just derivatives - between parties.






39. The absorption of one company by another; two companies become one entity and one or both of the pre-merger companies ceases to exist as a separate entity.






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






41. A level of inventory beyond anticipated needs that provides a cushion in the event that it takes longer to replenish inventory than expected or in the case of greater than expected demand.






42. A spontaneous form of credit in which a purchaser of the goods or service is financing its purchase by delaying the date on which payment is made.






43. A country that during its entire his-tory has invested more in the rest of the world than other countries have invested in it.






44. A valuation that sums the estimated values of each of a company's busi-nesses as if each business were an independent going concern.






45. A regression assumption violation that occurs when two or more independent vari-ables (or combinations of independent variables) are highly but not perfectly correlated with each other.






46. 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.






47. The graphical representation of a model of asset price dynamics in which - at each period - the asset moves up wi t probability p or down with probability (I - p).






48. The extent to which a company can effect - through the use of debt - a propor-tional change in the re turn on common equity that is greater than a given proportional change in operating income; also - short for the financial leverage ratio.






49. 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.






50. An algorithm that pro-duces uniformly distributed random numbers between 0 and 1.







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