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. An industry's underlying eco-nomic and technical characteristics.






2. The combination of the underlying - puts - calls - and risk-free bonds that replicates a forward contract.






3. An acceler-ated depreciation method that involves depreciat-ing the asset at double the straight-line rate. This rate is multiplied by the book value of the asset at the beginning of the period (a declining balance) to calculate depreciation expense.






4. Aka 'Market efficiency.






5. An option in which the underlying is a stock index.






6. 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






7. The rate of return from a cash-and-carry transaction implied by the futures price relative to the spot price.






8. The probability-weighted average of the possible outcomes ofa random variable.






9. With reference to portfolio strategies - the application of a strategy's portfolio selection rules to historical data to assess what would have been the strategy's historical performance.






10. Momentum indicators based on price.






11. 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.






12. An active investment strategy whereby the timing of cash outflows is not matched with investment maturities.






13. The revaluation of a financial asset or liability to its current market value or fair value.






14. Method used to estimate the overall capitalization rate by dividing the sale price of a comparable income property into the net operating income.






15. The analysis of portfolio performance in terms of the contribu-tions from various sources of risk.






16. Sales minus the cost of sales ~.e . - the cost of goods sold for a manufactur-ing cOlp pany) .






17. Securities held by banks or other financial intermediaries for trading purposes.






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






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






20. The ability to terminate a proj-ect at some future time if the financial results are disappointing.






21. An electronic payment network available to businesses - individuals - and financial institutions in the United States - U.S. -Territories - and Canada.






22. A measure of sensitivity; the incremental change in one variable with respect to an incre-mental change in another variable.






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






24. Ratios that measure how efficiently a company performs day-to-day tasks - such as the collection of receivables and management of inventory.






25. The relationship between earnings - dividends - and book value in which end-ing book value is equal to the beginning book value plus earnings less dividends - apart from ownership transactions.






26. Analysts who work for investment management fi rms - trusts - a d bank trust depart-ments - and similar institutions.






27. A third party that is sough t out bX the tar-get c0mpany's board to Burchase a substantial minority stake in the target-enough to block a hostile takeover without selling the entire company.






28. The difference between operat-ing assets (total assets less cash) and operating lia-bilities (total liabilities less total debt).






29. A measurement scale that has all the characteristics of interval measurement scales as well as a true zero point as the origin.






30. The cash flow that is real-ized because of a decision; the changes or incre-ments to cash flows resulting from a decision or action.






31. A permissible delivery procedure used by futures market participants - in which the long and short arrange a delivery pro-cedure other than the normal procedures stipu-lated by the futures exchange.






32. The share price at a particular point in the future.






33. An act passed by the U.S. Con-gress in 2002 that created the Public Company Accounting Oversight Board (PCAOB) to oversee auditors.






34. Earnings adjusted for nonrecur-ring - non-economic - or other unusual items to elim-inate anomalies andlor facilitate comparisons.






35. A varia-tion ofVAR that reflects credit risk.






36. Valuation approach that values an asset as the present discounted value of the income expected from it.






37. An inventory accounting method that averages the total cost of available inventory items over the total units avail-able for sale.






38. A forward contract to enter into a swap.






39. An annuity with a first cash flow that is paid one period from the present.






40. Costs that fluctuate with the level of production and sales.






41. The sum of market value of common equity - book value of preferred equity - and face value of debt.






42. A stage of growth in which the com-pany reaches an equilibrium in which investment opportunities on average just earn their opportu-nity cost of capital.






43. A poison pill takeover defense that gives target company shareholders the right to purchase shares of the acquirer at a significant discount to the market price - which has the effect of causing dilution to all existing acquiring com-pany shareholder






44. An activity ratio calculated as purchases divided by average trade payables.






45. The capital structure at which the value of the company is maximized.






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






47. A swap in which the underlying is an interest rate. Can be viewed as a currency swap in which both currencies are the same and can be created as a combination of currency swaps.






48. A European-style option with a value at maturity equal to the difference between the stock price at maturity and the average stock price during the life of the option - or $0 - whichever is greater.






49. The initial issuance ofcommon stock registered for public trading by a formerly private corporation.






50. The ratio of cash dividends paid to earnings for a period.