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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 payment system in which cus-tomer payments are mailed to a post office box and the banking institution retrieves and deposits these payments several times a day - enabling the company to hav use of the fund sooner than in a centralized system in wh






2. A portfolio offering the highest expected return for a given level of risk as mea-sured by variance or standard deviation of return.






3. An estimate of the equity risk pre-mium that is based upon estimates provided by a panel of finance experts.






4. Next twelve months P/E: current market price divided by an estimated next twelve months EPS.






5. The process of allocating the cost of intangible long-term assets having a finite useful life to accounting periods; the allocation of the amount of a bond premium or discount to the periods remaining until bond maturity.






6. The reciprocal of a price multi-ple - e.g. - in the case of a PI E ratio - the 'earnings yield' E/ P (where P is share price and E is earn-ings per share) .






7. Analysis that shows the changes in key financial quantities that result from given (economic) events - such as the loss of customers - the loss of a supply source - or a catastrophic event; a risk management technique involving examina-tion of the pe






8. A formula that expresses the equivalence or parity of spot and forward rates - after adjusting for differences in the interest rates.






9. A swap in which the floating payments have an upper limit.






10. The period benefited~y the employee's service - usually th e period between the grant date and the vesting date.






11. A rule that states that the number of years it takes for the level of a variable to double is approximately 70 divided by the annual percent-age growth rate of the variable.






12. The official price - designated by the clearinghouse - from which daily gains and losses will be determined and marked to market.






13. A dividend payout pol-icy under which earnings in excess of the funds necessary to finance the equity portion of com-pany's capital budget are paid out in dividends.






14. A variable used to explain the dependen t variable in a regression ; a right-hand-side variable in a regression equation .






15. A valuation ratio calculated as price per share divided by book value per share.






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






17. Options that relate to investment deci-sions such as the option to time the start of a proj-ect - the option to adjust its scale - or the option to abandon a project that has begun.






18. The number of observations in a given interval (for grouped data) .






19. Ratios that measure a company's ability to generate profitable sales from its resources (assets).






20. 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






21. A condition in the futures markets in which a transaction cannot take place because the price would be beyond the limits.






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






23. A liability account for money that has been collected for goods or services that have not yet been delivered; payment received in advance of providing a good or servIce.






24. Tax expenses that have been recognized and recorded on a company's income statement but which have not yet been paid.






25. An option strategy that is equiva-lent to a short butterfly spread.






26. The divisor in the expression for the value of a perpetuity.






27. The date on which a derivative con-tract expi res.






28. A bar chart of data that have been grouped into a frequency distribution.






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






30. The process of systematically allocat-ing the cost of long-lived (tangible) assets to theperiods during which the assets are expected toprovide economic benefits.






31. A method of revenue recognition in which - in each accounting period - the company estimates what percentage of the contract is complete and then reports that per-centage of the total contract revenue in its income statement.






32. A measure of correlation applied to ranked data.






33. Aka 'Residual income.'






34. The rate at which periodic interest payments are calculated.






35. An option contract that can be exercised at any time until its expiration date.






36. The minimum real wage rate needed to maintain life.






37. An activity ratio calculated as cost of goods sold divided by average inventory.






38. The operational flexibility to alter production when demand varies from fore-cast. For example - if demand is strong - a company may profit from employees working overtime or from adding additional shifts.






39. A random variable that can take on at most a countable number of possi-ble values.






40. A swap in which the floating payments have a lower limit.






41. A combination of interest rate put options designed to hedge a lender against lower rates on a floating-rate loan.






42. The ability to react and adapt to financial adversities and opportunities.






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






44. A loan in which the borrower receives a sum of money at the start and pays back the entire amount with interest in a single pay-ment at maturity.






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






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






47. A financial statement that provides information about a company's prof-itability over a stated period of time.






48. A financial instrument whose valuede ends on the value of some nderlying asset orfactor (e.g. - a stock price - an interest rate - orexchange rate ).






49. Income rate that reflects the relationship between equity income and equity capital.






50. The first in - first out - method of accounting for inventory - which matches sales against the costs of items of inventory in the order in which they were placed in inventory.