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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 company without positive expected net present value projects.






2. The probability of correctly rejecting the null-that is - rejecting the null hypothesis when it is false.






3. Unex-pected earnings per share divided by the standard deviation of unexpected earnings per share over a specified prior time period.






4. A forecasting approach that involves aggregating the individual company forecasts of analysts into industry fore-casts - and finally into macroeconomic forecasts.






5. The internal rate of return on a portfol io - taking account of all cash flows.






6. A probability based on logical analysis rather than on observation or personal judgment.






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






8. With reference to statisti. cal inference - the subdivision dealing with estimating the value of a population parameter.






9. Valuation approach that values an asset based on pricing multiples from sales of assets viewed as similar to the subject asset.






10. Liabilities related to expenses that have been incurred butnot yet paid as of the end of an accountingperiod-an example of an accrued expense is rent that has been incurred but not yet paid -resulting in a liability 'rent payable.'






11. A reduction in proportional ownership inter-est as a result of the issuance of new shares.






12. The rule that the joint probability of events A and B equals the probability of A given B times the probability of B.






13. A function with non-negative values such that probability can be described by areas under the curve graphing the function.






14. Analysis that involves com-parisons across individuals in a group over a given time period or at a given point in time.






15. The present discounted value of future cash flows: For assets - the present dis-counted value of the future net cash inflows that the asset is expected to generate; for liabilities - the present discounted value of the future net cash outflows that a






16. A mean computed after excluding a stated small percentage of the lowest and highest observations.






17. An investment where the investor exerts control over the investee - typically by having a greater than 50 percent ownership in the investee.






18. The establishment of objectives for individuals - groups - or divisions of an organiza-tion that takes into account the allocation of an acceptable level of risk.






19. Time thought of as advancing in extremely small increments.






20. Bias that may result when failed or defunct companies are excluded from member-ship in a group.






21. The ratio of the percentage change in net income to the percentage change in units sold; the sensitivity of the cash flows to owners to changes in the number of units pro-duced and sold.






22. When a bankrupt company is allowed to enforce contracts that are favorable to it while walking away from contracts that are unfa-vorable to it.






23. An esti-mate of a country's equity risk premium that is based upon the historical averages of the risk-free rate and the rate of return on the market portfolio.






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






25. The value of exports of goods and ser-vices minus the value of imports of goods and services.






26. The amount for which one can sell some-thing - or the amount one must pay to acquire something.






27. The pursuit of wealth by capturing economic rent---consumer surplus - producer sur-plus - or economic profit.






28. The expected value of a stated event given that another event has occurred.






29. An arrangement whereby someone - an agent - acts on behalf of another per-son - the principal.






30. The cost to a com pany of issu-ing preferred stock; the dividend yield that a com-pany must commit to pay preferred stockholders.






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






32. All members of a specified group.






33. A bank commitment to extend credit up to a pre-specified amount; the commitment is considered a short-term liability and is usually in effect for 364 days (one day short of a full year).






34. The rate at which an option's time value decays.






35. The concept that dividends paid now displace earnings in all future periods.






36. The discount possibly applied by the market to the stock of a company operating in multiple - unrelated businesses.






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






38. A method of accounting for abusiness combination where the acquiring com-pany allocates the purchase price to each assetacquired and liability assumed at fair value. If thepurchase price exceeds the allocation - the excessis recorded as goodwill.






39. Depreciatiolil methods that allocate a relatively large proportion of the cost of an asset to the early years of the asset's useful life.






40. Shares that were issued and subse-quently repurchased by the company.






41. Financial statements that are not accompanied by an auditor's opinion letter.

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






43. The proportion of a company's assets that is financed with long-term debt.






44. A corporate transac-tion in which management repurchases all out-standing common stock - usually using the proceeds of debt issuance.






45. Rate of return that dis-counts future cash flows from an investment to the exact amount of the investment; the discount rate that makes the present value of an invest-ment's costs (outflows) equal to the present value of the investment's benefits (in






46. An active investment strategy that includes intentional matching of the timing of cash outflows with investment maturities.






47. The volatility that option traders use to price an option - implied by the price of the option and a particulau option-pricing model.






48. With respect to inventory accounting - the planned or target unit cost of inventory items or services.






49. The sum of the real risk-free interest rate and the inflation premium.






50. The procedure of drawing a sample to satisfy the definition of a simple ran-dom sample.