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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. The single-period interest rate for a completely risk-free security if no infla-tion were expected.






2. Investigation and analysis in support of a recommendation; the failure to exercise due diligence may sometimes result in liability accord-ing to various securities laws.






3. An annuity having a first cash flow that is paid immediately.






4. The differ-ence between net operating assets at the end and the beginning of the period.






5. The expected return on an invest-ment minus the risk-free rate.






6. The net amount of cash provided from operating activities.






7. The risk of loss from failures in a company's systems and proce-dures (for example - due to computer failures or human failures) or events completely outside of the control of organizations (which would include 'acts of God' and terrorist actions) .






8. Debt or equity financial assets bought with the inten-tion to sell them in the near term - usually less than three months; securities that a company intends to trade.






9. Mutually exclusive proj-ects compete directly with each other. For example - if Projects A and B are mutually exclusive - you can choose A or B - but you cannot choose both. n Factorial For a positive integer n - the product of the first n positive i






10. A floating-rate note or bond in which the coupon is adjusted at a multiple of a benchmark interest rate.






11. The strategy of using futures contracts to enter the market without an immediate outlay of cash.






12. 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.






13. The price paid to buy an asset.






14. The currency in which finan-cial statement amounts are presented.






15. The standard deviation of the differ-ence in returns between an active investment portfolio and its benchmark portfolio; also called tracking error volatility - tracking risk - and active risk.






16. A synonym for robust standard errors.






17. A financial state-ment that reconciles beginning-of-period ana end-of-period balance sheet values of retained income; shows the linkage between the balance sheet and income statement.






18. Common-size analysis using only one reporting period or one base financial state-ment; fo r example - an income statement in which all items are stated as percentages of sales.






19. The amount for which one can sell some-thing - or the amount one must pay to acquire something.






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






21. The estimated cost of equity capital in money terms.






22. The risk of a change in value of a n asset or liability denomi-nated in a foreign currency due to a change in exchange rates.






23. In reference to short-term cash management - it is an investment strategy charac-terized by simple decision rules for making daily investments.






24. The amount of money a buyer pays and seller receives to engage in an option transaction.






25. An agreement between two parties to exchange a series of future cash flows.






26. Financial ratios involving bal-ance sheet items only.






27. A rate of return that reflects the rela-tionship between differently dated cash flows; a discount rate.






28. Financial statements in which all elements (accounts) are stated as a per-centage of a key figure such as revenue for an income statement or total assets for a balance sheet.






29. An event or piece of information that causes the marketplace to re-evaluate the prospects of a company.






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






31. An estimate of the average number of days it takes deposited checks to clear; average daily float divided by average daily deposit.






32. A type of interest rate swap in which the floating payment is set at the end of the period and the interest is paid at that same time.






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






34. A con-flict of interest that arises when the agent in an agency relationship has goals and incentives that differ from the principal to whom the agent owes a fiduciary duty.






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






36. A test that is not concerned with a parameter - or that makes minimal assumptions about the population from which a sam Ie comes.






37. A variation of a forward contract that has essentially the same basic definition but with some additional features - such as a clearing-house guarantee against credit losses - a daily settlement of gains and losses - and an organized electronic or fl






38. The required rate of return on com-mon stock.






39. The ability to terminate a proj-ect at some future time if the financial results are disappointing.






40. Approach that values a private company based on the values of the underlying assets of the entity less the value of any related liabilities.






41. Costs (e.g. - executives' salaries) that cannot be directly matched with the timing of rev-enues and which are thus expensed immediately.






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






43. Liabilities related to expenses that have been incurred butnot yet paid as of the end of an accountingperiod-an example of an accrued expense is rent that has been incurred but not yet paid -resulting in a liability 'rent payable.'






44. The return that an investorearns during a specified holding period; a syn-onym for total return.






45. 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.






46. A feature of futures markets in which futures prices provide valuable information about the price of the underlying asset.






47. In reference to mergers - it is the savings achieved through the consolidation of operations and elimination of duplicate resources.






48. The expected excess return on the market over the risk-free rate.






49. 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.






50. The use of inven-tory as collateral for a loan; similar to a trust receipt arrangement except there is a third party (i.e. - a warehouse company) that supervises the inventory.






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