Test your basic knowledge |

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. Any test (or procedure) concerned with parameters or whose validity depends on assumptions concerning the population generat-ing the sample.






2. A statistical model used to clas-sifY borrowers according to creditworthiness.






3. 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.






4. An event or piece of information that causes the marketplace to re-evaluate the prospects of a company.






5. An option strategy involving the purchase of one option and sale of another option that is identical to the first in all respects except either exercise price or expiration.






6. A variation of VAR that reflects the risk of a company's cash flow instead of its market value.






7. The return on a portfolio minus the return on the portfolio's benchmark.






8. 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.






9. A floating-rate note or bond in which the coupon is adjusted to move opposite to a benchmark interest rate.






10. When parties agree to exchange only the net amount owed from one party to the other.






11. Also called present value of a basis point or price value of a basis point (PVBP) - the change in the bond price for a I basis point change in yield.






12. The probability of an event estimated as a relative frequency of occurrence.






13. The contribution to active risk squared resulting from the portfolio's different-than-benchmark exposures relative to factors specified in the risk model.






14. A distribution that specifies the probabilities of a random variable's possible outcomes.






15. A model of stock valuation that views intrinsic value of stock as the sum of book value per share plus the present value of the stock's expected future residual income per share.






16. 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.






17. An indicator of profitability - calculated as net income divided by revenue; indicates how much of each dollar of revenues is left after all costs and expenses.






18. The analysis of the total variability of a dataset (such as observations on the dependent variable in a regression) into components representing different sources of variation; with reference to regression - ANOVA provides the inputs for an F-test of






19. To reduce the value of a future payment in allowance for how far away it is in time; to calcu-late the present value of some future amount. Also - the amount by which an instrument is priced below its face value.






20. The price of a security with accrued interest.






21. 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.






22. A bond in which the amount received for delivering the bond is largest com-pared with the amount paid in the market for the bond.






23. A sample measure of the degree of a distribution's peakedness.






24. Approach to translating for-eign currency financial statements for consolida-tion in which all assets and liabilities are translated at the current exchange rate. The cur-rent rate method is the prevalent method of translation.






25. The differential of infor-mation between corporate insiders and outsiders regarding the company's performance and prospects. Managers typically have more informa-tion about the company's performance and prospects than owners and creditors.






26. A subset of a population.






27. The process of accumulating interest on interest.






28. A graphical depic-tion of a company's investment opportunities ordered from highest to lowest expected return. A company's optimal capital budget is found where the investment opportunity schedule inter-sects with the company's marginal cost of capit






29. The residuals from a fitted time-series model within the sample period used to fit the model.






30. Aka 'Market efficiency. '






31. A measure of dispersion relat-ing to a population - calculated as the mean of the squared deviations around the population mean.






32. A condition in the futures markets in which the benefits of holding an asset exceed the costs - leaving the futures price less than the spot price.






33. 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.






34. European option An option contract that can only be exercised on its expiration date.






35. The system of principles - policies - procedures - and clearly defined responsi-bilities and accountabilities used by stakeholders to overcome the conflicts of interest inherent in the corporate form.






36. With reference to investmentselection processes - an approach that involves selection from all securities within a specified investment universe - i.e. - without prior narrowiNg of the universe on the bas' s of macroeconomj c or overall market consid






37. Segment revenue divided by seg-ment assets .






38. The expected excess return on the market over the risk-free rate.






39. A financial covenant made in conjunction with existing debt that restricts a company's ability to incur additional debt at the same seniority based on one or more financial tests or conditions.






40. A type of non-audited financial statements; typically provide an opinion letter with representations and assurances by the reviewing accountant that are less than those in audited financial statements.






41. The sale by a foreign firm of exports at a lower price than the cost of production.






42. A breakdown of accounts into cate-gories of days outstanding.






43. The annual return that an investor earns on a bond if the investor purchases the bond today and holds it until maturity.






44. An offset to accounts receivable for the amount of accounts receivable that are estimated to be uncollectible.






45. Computer-generated sensitivity or sce-nario analysis that is based on probability models fo r the factors that drive outcomes.






46. A theory of regulatory behavior that holds that regulators must take account of the demands of three groups: legislators - who established and oversee the regulatory agency; firms in the regulated industry; and consumers of the regulated indus-try's






47. With reference to equity investors - investors whose investment disciplines cannot be clearly categorized as value or growth.






48. Income approach that values an asset based on estimates of future cash flows discounted to present value by using a discount rate reflective of the risks associated wi th the cash flows.






49. Sales on a bill-and-hold basis involve selling products but not delivering those products until a later date.






50. A listing in which tile order of tile listed items does not matter.