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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. All members of a specified group.






2. The amount of money that a trader deposits in a margin account. The term is derived from the stock market practice in which an investor bor-rows a portion of the money required to purchase a certain amount of stock. In futures markets - there is no b






3. Linear regression involv-ing two or more independent variables.






4. 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.






5. A result indicating that the null hypothesis can be rejected; with reference to an estimated regression coefficient - frequently understood to mean a result indicating that the corresponding population regression coefficient is different from O.






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






7. An arrangement whereby a customer authorizes a debit to a demand account; typically used by companies to collect routine pay-ments for services.






8. 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.






9. The risk associated with the conversion of foreign financial statements into domestic currency.






10. A procedure used primarily in futures markets in which the parties to a contract settle the amount owed daily. Also known as the daily settlement.






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






12. CMT A hypothetical U.S. Treasury note with a constant maturity. A CMT exists for various years in the range of 2 to






13. Quantiles that divide a distribution into 100 equal parts.






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






15. An estimate of the average time that elapses between paying suppliers for materi-als and collecting cash from the subsequent sale of goods produced.






16. A decision rule for choos-ing between two investments based on their means and variances.






17. Nonconvertible - noncallable preferred stock with a specified divi-dend rate that has a claim on earnings senior to the claim of common stock - and no maturity date.






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






19. Not due to be consumed - converted into cash - or settled within one year after the bal-ance sheet date.






20. 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.






21. An Activity ratio calculated as total revenue divided by average net fixed assets.






22. The observation that P /Es tend to be high on depressed EPS at the bottom of a business cycle - and tend to be low on unusually high EPS at the top of a business cycle.






23. Current market w ice divided by the most recent quarterly per-share dividend multiplied by four.






24. The actual return on a debt security if it is held to maturity.






25. The risk associated with the pos-sibility that a payment due at a later date will not be made.






26. The positive square root of the sample variance.






27. Costs borne by management to assure owners that they are working in the own-ers' best interest (e.g. - implicit cost of non-compete agreements).






28. A merger; the term may be applied to any transaction - but is often used in reference to hos-tile transactions.






29. A non-operating entity created to carry out a specified purpose - such as leasing assets or securitizing receivables; can be a corporation - partnership - trust - limited liability - or partnership formed to facilitate a specific type of business act






30. A set of techniques for estimating losses in extremely unfavorable combinations of events or scenarios.






31. A widely used approach to estimate an overall capitalization rate. It is based on the premise that debt and equity financ-ing is typically involved in a real estate transaction.






32. The property of having a non-constant variance; refers to an error term with the property that its variance differs across observations.






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






34. Options that - if exercised - would result in the value received being worth more than the payment required to exercise.






35. Each component call option in a cap.






36. With eference to grouped data - a se t or val-ues within w ich an observation falls.






37. A complete pass through the steps of a simula tion .






38. Factors related to the company's internal performance - such as factors relating to earnings growth - earnings variability - earnings momentum - and financial leverage.






39. Under U.S. GAAP - a measure used in estimating a defined-benefit pen-sion plan's liabilities - defined as 'the actuarial present value of benefits (whether vested or non-vested) attributed by the pension benefit formula to employee service rendered b






40. 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.






41. A company's chosen propor-tions of debt and equity.






42. A third party that is sought out by the target company's board to purchase the target in lieu of a hostile bidde .






43. The seller of a derivative contract. Also refers to the position of being short a derivative.






44. With reference to a transaction or a security - one that would increase earnings per share (EPS) or result in EPS higher than the com-pany's basic EPS-antidilutive securities are not included in the calculation of diluted EPS.






45. An option strategy involving the purchase of a put and sale of a call in which the holder of an asset gains protection below a certain level - the exercise price of the put - and pays for it by giving up gains above a certain level - the exercise pri






46. An extra return that compen-sates investors for the risk of loss relative to an investment's fair value if the investment needs to be converted to cash quickly.






47. The standard deviation of the differ-ences between a portfolio's returns and its bench-mark's returns; a synonym of active risk.






48. Quantiles that divide a distribution into 10 equal parts.






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






50. The relationship between option price and volatility.