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CFA Level2 Vocab

Subjects : certifications, cfa
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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 measure of financial lever-age calculated as average total assets divided by average total equity.






2. A swap in which the payments are basedon the difference between interest rates in twocountries but payments are made in only a singlecurrency.






3. The investigation of issues relating to the accuracy of reported accounting results as reflections of economic per-formance; quality of earnings analysis is broadly understood to include not only earnings manage-ment - but also balance sheet manageme






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






5. A money measure of the goods and services produced within a country's borders over a stated time period.






6. Quantiles that divide a distribution into four equal parts.






7. A method for estimating a company's before-tax cost of debt based upon the yield on comparably rated bonds for maturities that closely match that of the company's existing debt.






8. The currency of the country where a company is located.






9. The loss in the value of an option resulting from movement of the option price toward its payoff value as the expiration day approaches.






10. The mix of debt and equity that a company uses to finance its business; a company's specific mixture of long-term financing.






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






12. An asset that trades in a market in which buyers and sellers meet - decide on a price - and the seller then delivers the asset to the buyer and receives payment. The underlying is the asset or other derivative on which a particular derivative is base






13. 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.'






14. The price of a security with accrued interest.






15. A form of data min-ing that applies information developed by previ-ous researchers using a dataset to guide curren t research using the same or a related dataset.






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






17. The part of the execution step of the portfolio management process that involves the implementation of port-folio decisions by trading desks.






18. All changes in equity other than contributions by - and distributions to - own-ers; income under clean surplus accounting; includes all changes in equity during a period except those resulting from investments by own-ers and distributions to owners;






19. Controlling additional property throughreinvestment - refinancing - and exchanging.






20. A legal corporate entity whose shareholders are its members. The members of the exchange have the privilege of executing transactions directly on the exchange.






21. The unsold units of product on hand.






22. The characteristic of minimum-variance frontiers that they are sensitive to small changes in inputs.






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






24. The risk attributed to the operating cost structure - in particular the use of fixed costs in operations; the risk arising from the mix of fixed and variable costs; the risk that a company's operations may be severely affected by environ-mental - soc






25. The amount of time between check issuance and a check's clearing back against the company's account.






26. The price at which an asset or liability would change hands between a willing buyer and a willing seller whe n the former is not under any compulsion to buy and the latter is not under any compulsion to sell; the price that would be received to sell






27. A ratio of an ending price over a beginning price; it is equal to 1 plus the holding period return on the asset.






28. The process of selecting - evaluat-ing - and interpreting financial data in order to formulate an assessment of a company's present and future financial condition and performance.






29. The fixed price or rate at which the transaction scheduled to occur at the expiration of a forward contract will take place. This price is agreed on at the initiation date of the contract.






30. A weighted average of the after-tax required rates of return on a company's common stock - preferred stock - and long-term debt - where the weights are the fraction of each source of financing in the company's target capital structure.






31. Describes a distribution that is more peaked than a normal distribution.






32. Aka 'Market efficiency. '






33. 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.






34. With respect to financial statement analy-sis - the ability of a company to fulfill its long-term obligations.






35. The company in a merger or acquisition that is acquiring the target.






36. Is Derivatives in which the payoffs occur if a specific event occurs; generally referred to as options.






37. 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.






38. Activities which are associated with the acquisition and disposal of property - plant - and equipment; intangible assets; other long-term assets; and both long-term and short-term investments in the equity and debt (bonds and loans) issued by other c






39. 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.






40. The yield to maturity on a basis that ignores compounding.






41. The principle that the approximate num-ber of years necessary for an investment to double is 72 divided by the stated interest rate.






42. With reference to cash flow statements - a format for the presenta-tion of the statement which - in the operating cash flow section - begins with net income then shows additions and subtractions to arrive at operatingcash flow.






43. A system that allows individual units within an organization to manage risk. Decentralization results in duplication ofeffort but has the advantage of having people closer to the risk be more d irectly involved in its management.






44. A strategy in which a position is hedged by making frequent adjustments to the quantity of the instrument used for hedging in relation to the instrument being hedged.






45. The ratio ofthe percentage change in operating income to the percentage change in units sold; the sensitivity of operating income to changes in units sold.






46. An approach to using price multiples that relates a price multiple to forecasts of fundamentals through a discounted cash flow model.






47. The granting of stock options to employees as a form of compensation.






48. 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.






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






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







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