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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. Valuation measures and other factors related to share price or the trading characteristics of the shares - such as earn-ings yield - dividend yield - and book-to-market value.






2. The difference between revenue and expenses; what remains after subtracting all expenses (including depreciation - interest - and taxes) from revenue.






3. A sample measure of degree of asymmetry of a distribution.






4. A model for pncmg futurescontracts in which the futures price is determinedby adding the cost of carry to the spot price.






5. The process of valuing long-lived assets at fair value - rather than at cost less accumulated depreciation. Any resulting profit or loss is either reported on the income statement and/or through equity under revaluation surplus.






6. A tool that calculates the contri-bution to real CDP growth of each of its sources.






7. The risk associated with interest rates - exchange rates - and equity prices.






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






9. With reference to regression errors - errors that are correlated across observations.






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






11. A contract signed by both parties to a merger that clarifies the details of the transaction - including the terms - war-ranties - conditions - termination details - and the rights of all parties.






12. Under IFRS - the liability of a defined benefit pension.






13. Any rate used in finding the present value of a future cash flow.






14. A finite set of level sequential cash flows.






15. Public-company com-parables for the company being valued.






16. The price paid to buy an asset.






17. A range that has a given proba-bility that it will contain the population parameter it is intended to estimate.






18. A valuation multiple that relates the total market value of all sources of a company's capital (net of cash) to a measure of fundamental value for the entire company (such as a pre-interest earnings measure).






19. The ratio of the percentage change in net income to the percent-age change in operating income; the sensitivity ofthe cash flows available to owners when operating income changes.






20. An approach for estimating a country's equity risk premium. The market rate of return is estimated as the sum of the dividend yield and the growth rate in dividends for a market index. Subtracting the risk-free rate of return from the estimated marke






21. A country's record of international trading - borrowing - and lending.






22. A dividend yield based on the anticipated dividend during the next 12 months.






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






24. Total company valme (the market value of debt - common equity - and preferred equity) minus the value of cash and investments.






25. The cost of debt financing to a com-pany - such as when it issues a bond or takes out abank loan.






26. A measure of an option-free bond's aver-age maturity. Specifically - the weighted average maturity of all future cash flows paid by a security - in which the weights are the present value of these cash flows as a fraction of the bond's price. A measu






27. A subset of a larger popula-tion created in such a way that each element of the population has an equal probability of being selected to the subset.






28. 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.






29. A number between - 1 and + 1 that measures the co-movement (linear association) between two random variables.






30. In statistics - a desirable property of esti-mators; an efficient estimator is the unbiased esti-mator with the smallest variance among unbiased estimators of the same parameter.






31. The condition in which supply equals demand.






32. Debt (fixed-income) securities that a company intends to hold to matu-rity; these are presented at their original cost - updated for any amortization of discounts or pr.emiums.






33. The problem or issue of popu-lation regression parameters that have changed over time.






34. Asset inflows not directly related to the ordi-nary activities of the business.






35. Amounts owed to the company from parties other than customers.






36. An amount equal to saving minus investment.






37. Costs borne by owners to moni tor the management of the company (e.g. - board of director expenses).






38. Shareholders' equity (total assets minus total liabilities) minus the value of preferred stock; common shareholders' equity.






39. A transaction in which a position in the underlying is protected by buying a put and selling a call with the premium from the sale of the call offsetting the premium from the purchase of the put. It can also be used to protect a floating-rate borrowe






40. 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.






41. The unsold units of product on hand.






42. Under U.S. GAAP - a measure used in estimating a defined-benefit pen-sion plan's liabilities - defined as 'the actuarial present value as of a date of all benefits attributed by the pension benefit formula to employee ser-vice rendered prior to that






43. EPS) Netincome - minus preferred dividends - divided bythe number of common shares outstanding con-sidering all dilutive securities (e.g. - convertibledebt and options); the EPS that would result if alldilutive securities were converted into commonsh






44. Accounting in which some income items are reported as part of stockholders' equity rather than as gains and losses on the income statement; certain items of comprehensive income bypass the income statement and appear as direct adjustments to sharehol






45. A capital rationing environment assumes that the company has a fixed amount of funds to invest.






46. A valuation indicator based on past pdce movement.






47. With reference to time-series mod-els - a model in which the growth rate of the time series as a function of time is constant.






48. A trade in two closely related stocks that involves buying the relatively undervalued stock and selling short the relatively overvalued stock.






49. The part of the execution step of the portfolio manage-ment process in which investment strategies are integrated with expectations to select a portfolio of assets.






50. The risk of loss caused by a counterparty's or debtor's failure to make a promised payment.