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. A scheme of measuring differ-ences. The four types of measurement scales are nominal - ordinal - interval - and ratio.






2. The cost associated with holding someasset - including financing - storage - and insurancecosts. Any yield received on the asset is treated as anegative carrying cost.






3. An intangible asset that represents the excess of the purchase price of an acquired com-pany over the value of the net assets acquired.






4. A purchase involving a buyer that would benefit from certain synergies associ-ated with owning the target firm.






5. The analysis of the strength of the linear relationship between two data series.






6. Fixed-income secuntles in which the holder of the security has the right to withhold payment of the full amount due at matu-ri ty if a credi t even t occurs.






7. Observations on characteristic(s) of the same observational unit through time.






8. A swap transaction in which at least one cash flow is tied to the return to an equity portfo-lio position - often an equity index.






9. The operational flexibility to adjust prices when demand varies from forecast. For example - when demand exceeds capacity - the company could benefit from the excess demand by increasing prices.






10. Instruments that payinterest as the difference between the amountborrowed and the amount paid back.






11. The cash flow available to a company's common shareholders after all operat-ing expenses - interest - and principal payments have been made - and necessary investments in working and fixed capital have been made.






12. Analysis that shows the range of possible outcomes as specific assumptions are changed.






13. A comparison of revenues with working capital to produce a measure that shows how efficiently working capital is employed.






14. An approach to investment analysis and security selection.






15. Accounting that satisfies the condition that all changes in the book value of equity other than transactions with owners are reflected in income. The bottom-line income reflects all changes in shareholders' equity arising from other than owner transa






16. A means of settling payments in which the amount owed by the first party to the second is netted with the amount owed by the sec-ond party to the first; only the net difference is paid.






17. A merger involving compa-nies that are in unrelated businesses.






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






19. A pre-offer takeover defense mech-anism involving the corporate charter (e.g. - stag-gered boards of directors and supermajority provisions) .






20. Items that affect comprehensive income but which bypass the income statement.






21. An option strategy involving the purchase of two calls and one put.






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






23. Under U.S. GAAP - a mea-sure used in estimating a defined-benefit pension plan's liabilities - defined as the 'actuarial present value of vested benefits.'






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






25. An updated probability that reflects or comes after new information.






26. A sample measure of the degree of a distribution's peakedness in excess of the normal distribution's peakedness.






27. The difference between the actual value per share and the no-growth value per share.






28. 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.






29. An approach to investing thatfocuses on the individual characteristics of securi-ties rather than on macroeconomic or overall market forecasts.






30. The costs of holding an asset - generally a function of the physical char-acteristics of the underlying asset.






31. A variation of the market approach; establishes a value estimate based on the observed multiples from trading activity in the shares of public companies viewed as reasonably comparable to the subject private company.






32. A loan in which the interest rate is reset at least once after the starting date.






33. An accelerated depre-ciation method - i.e. - one that allocates a relativelylarge proportion of the cost of an asset to the early years of the asset's useful life.






34. An adjustment used to facilitate delivery on bond futures contracts in which any of a number of bonds with different characteristics are eligible for delivery.






35. A variation of a straddle in which the put and call have different exercise prices.






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






37. Unexpected earnings divided by the standard deviation of analysts' earnings forecasts.






38. Temporary differ-ences that result in a taxable amount in a future period when determining the taxable profit as the balance sheet item is recovered or settled. t-Distribution A symmetrical distribution defined by a single parameter - degrees of free






39. In probability - with reference to an event 5 - the event that 5 does not occur; in eco-nomics - a good that is used in conjunction with another good.






40. A present value model of stock value that views the intrinsic value of a stock as present value of the stock's expected future dividends.






41. A merger or acquisition that is to be paid for with cash - securities - or some combina-tion of the two.






42. 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.






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






44. Forecasted dividends per share over the next year divided by current stock price.






45. A liquidity ratio calculated as current assets divided by current liabilities.






46. A depreciation method tHat allocates the cost of a long-lived asset based on-actual usage during the period .






47. The after-tax net operating profits as a percent of total assets or capital.






48. The value of the middle item of a set of items that has been sorted into ascending or descending order; the 50th percentile.






49. The amount that each unit sold contributes to covering fixed costs- that is - the difference between the price per unit and the variable cost per unit.






50. A value against which a computed test statistic is compared to decide whether to reject or not reject the null hypothesis.