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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 original time to maturity on a swap.






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






3. A hypothesis concern-ing pricing behavior that holds that even though there are only a few firms in an industry - they are forced to price their products more or less com-petitively because of the ease of entry by outsiders. The key aspect of a conte






4. Options that - if exercised - would result in the value received being worth more than the payment required to exercise.






5. A model that specifies an asset's value relative to the value of another asset.






6. The price paid to buy an asset.






7. Revenue that has been earned but not yet billed to customers as of the end of an accounting period.






8. The set of assets available for investment.






9. Earnings for a given time period - minus a deduction for common shareholders' opportunity cost in generating the earnings.






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






11. 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






12. In accounting contexts - cash on hand (e.g. - petty cash and cash not yet deposited to the bank) and demand deposits held in banks and similar accounts that can be used in payment of obligations.






13. A legal contract specifYing the terms of a bond issue.






14. A valuation ratio calculated as price per share divided by sales per share.






15. The sale by a foreign firm of exports at a lower price than the cost of production.






16. The relationship between the price of the underlying and an option's exercise price.






17. The value of exports of goods and ser-vices minus the value of imports of goods and services.






18. The cost to a com pany of issu-ing preferred stock; the dividend yield that a com-pany must commit to pay preferred stockholders.






19. A decision rule for choos-ing between two investments based on their means and variances.






20. The risk of a change in value between the transaction date and the settlement date of an asset or liability denominated in a for-eign currency.






21. A factor related to the econ-omy - such as the inflation rate - industrial produc-tion - or economic sector membership. acroeconomic factor model A multifac tor model in which the factors are surprises in macroeco-nomic variables that significan tly






22. A descriptive measure computed from or used to describe a population of data - convention-ally represented by Greek letters.






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






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






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






26. In the context of corporate finance - leverage refers to the use of fixed costs within a company's cost structure. Fixed costs that are operating costs (such as depreciation or rent) create operating leverage. Fixed costs that are financial costs (su






27. A bank commitment to extend credit up to a pre-specified amount; the commitment is considered a short-term liability and is usually in effect for 364 days (one day short of a full year).






28. In the fixed income markets - to price a security on the basis of valuation-relevant char-acteristics (e.g. - debt-rating approach).






29. The cash flow that is real-ized because of a decision; the changes or incre-ments to cash flows resulting from a decision or action.






30. A valuation indicator based on past pdce movement.






31. An option on the yield spread on a bond.






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






33. The company's total cost of capital in money terms.






34. With respect to double-entry accounting - a debit records increases of asset and expense accounts or decreases in liability and owners' equity accounts.






35. The expected total e b urn on an asset over a stated olding period; for stocks - the sum of tne expected dividend yield and the expected price appreciation over the holding period.






36. The competitive strategy of offeringunique products or services along some dimen-sions that are widely valued by buyers so that thefirm can command premium prices.






37. A time series that is not covariance station-ary is said to have a unit root.






38. An estimate of the average time that elapses between paying suppliers for materi-als and collecting cash from the subsequent sale of goods produced.






39. A stock's current mar-ket price divided by the most recent four quarters of earnings per share.






40. The process of using an option to buy or sell the underlying.






41. A variation of the market approach; establishes a value estimate based on the observed multiples from trading activity in the shares of public companies viewed as reasonably comparable to the subject private company.






42. A basis for reporting investment income in which the investing entity recognizes a share of income as earned rather than as divi-dends when received. These transactions are typi-cally reflected in Investments in Associates or Equity Method Investment






43. A multivariate classification technique used to discriminate between groups - such as companies that either will or will not become bankrupt during some time frame.






44. An inventory accounting method in which the sales value of an item is reduced by the gross margin to calculate the item's cost.






45. A condition in the futures markets in which the benefits of holding an asset exceed the costs - leaving the futures price less than the spot price.






46. A solvency ratio calculated as total debt divided by total assets.






47. The expected return in excess of the risk-free rate for a portfolio with a sensitivity of 1 to one factor and a sensitivity of 0 to all other factors.






48. A contract in which one party has the right to claim a payment from another party in the event that a specific credit event occurs over the life of the contract.






49. 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.






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







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