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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. Aka Liquidity discount.






2. A stage of growth in which the com-pany reaches an equilibrium in which investment opportunities on average just earn their opportu-nity cost of capital.






3. Amounts owed by a business to credi-tors as a result of borrowings that are evidenced by (short-term) loan agreements. n-Period moving average The average of the current and immediately prior n - 1 values of a time series.






4. A swaption that allows the holder to enter into a swap as the fixed-rate receiver and floating-rate payer.






5. The proportional annual benefit that results from making an investment.






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






7. An objective measure of the quality and safety of a company's debt based upon an analysis of the company's ability to pay the prom-ised cash flows - as well as an analysis of any indentures.






8. A standardized measure of systematic risk based upon an asset's covariance with the market portfolio.






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






10. Options that - if exercised - would require the payment of more money than the value received and therefore would not be cur-rently exercised.






11. The competitive strategy of being the lowest cost producer while offering products comparable to those of other firms - so that prod-ucts can be priced at or near the industry average.






12. Said of a por tfolio for which eco-nomic sectors are represented in the same pro-portions as in the benchmark - using market-value weights.






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






14. The money of other countries regardless of whether that money is in the form of notes - coins - or bank deposits.






15. The ratio of cash dividends paid to earnings for a period.






16. A model of stock valuation that views intrinsic value of stock as the sum of book value per share plus the present value of the stock's expected future residual income per share.






17. An intangible that cannot be acquired singly and that typically possesses an indefinite benefit period; an example is account-ing goodwill.






18. Research and development costs relating to projects that are not yet completed - such as have been incurred by a company that is being acquired.






19. ID) With respect to random variables - the property of ran-dom variables that are independent of each otherbut follow the identical probability distribution.






20. A reduction or discount to value for shares that are not publicly traded.






21. A beta that is based at least in part on fundamental data for a company.






22. A numerical measure of how sensitive an option's delta is to a change in the underlying.






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






24. Investing on the basis of dif-ferential expectations.






25. The margin requirement on any day other than the first day of a transaction.






26. A measurement scale that sorts data into categories that are ordered (ranked) with respect to some characteristic.






27. Segment liabilities divided by segment assets.






28. With reference to estimators - describes an estimator for which the probability of estimates close to the value of the population parameter increases as sample size increases.






29. A method of account-ing in which combined companies were portrayed as if they had always operated as a single eco-nomic entity. Called pooling of interests under






30. A value at or below which a stated fraction of the data lies.






31. A graph line that describes the combinations of expected return and standard deviation of return available to an investor from combining the optimal portfolio of risky assets with the risk-free asset.






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






33. With reference to a sample - the mean of the absolute values of deviations from the sample mean.






34. Analysts who work at brokerages.






35. A balance sheet liability that arises when a deficit amount is paid for income taxes relative to accounting profit. The taxable income is less than the accounting profit and income tax payable is less than tax expense. The company expects to eliminat






36. The combination of the underlying - puts - calls - and risk-free bonds that replicates a forward contract.






37. Serial correlation in which a positive e rror for one observation increases the chance of a negative error for another observation - and vice versa.






38. An agreement between two parties in which one party - the buyer - agrees to buy from the other party - the seller - an underlying asset at a later date for a price established at the start of the contract.






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






40. The risk that failures by company man-agers to effectively manage a company's environ-mental - social - and governance risk exposures will lead to lawsuits and other judicial remedies - resulting in potentially catastrophic losses for the company; th






41. The process of determining the value of an asset or service on the basis of variables per-ceived to be related to future investment returns - or on the basis of comparisons with closely similar assets.






42. An approach to valuation that involves using a price multiple to evaluate whether an asset is relatively fairly valued - rela-tively undervalued - or relatively overvalued when compared to a benchmark value of the multiple.






43. An estimation formula; the formula used to compute the sample mean and other sample statistics are examples of estimators.






44. The relationship between option price and volatility.






45. I) An interest rate swap involving two floating rates. 2) A swap in which both parties pay a floating rate.






46. Probabilities reflecting beliefs prior to the arrival of new information.






47. 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;






48. The rule that - on the average - with no change in technology - a 1 percent increase in capital per hour of labor brings a 1/3 percent increase in labor productivity.






49. Financial ratios measuring the com-pany's ability to meet its short-term obligations.






50. The estimation of an unknown value on the basis of two known values that bracket it - using a straight line between the two known values.