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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. 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.






2. A legal restriction that dividends cannot exceed retained earnings.






3. An opportunity to conduct an arbitrage; an opportunity to earn an expected positive net profit without risk and with no net investment of money.






4. The probability of the joint occur-rence of stated even ts.






5. An equation describing the expected return on any asset (or portfolio) as a linear function of its beta relative to the market portfolio.






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






7. Costs of research and development in progress atan acquired company; often - part of the purchaseprice of an acquired company is allocated to suchcosts.






8. The value derived using a sum-of-the-parts valuation.






9. A swap transaction in which at least one cash flow is tied to the return to an equity portfo-lio position - often an equity index.






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






11. A merger; the term may be applied to any transaction - but is often used in reference to hos-tile transactions.






12. Options originally created with expirations of sev-eral years.






13. 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






14. An attempt to take control of a company through a shareholder vote.






15. A reduction in the number of shares outstanding with a corresponding increase in share price - but no change to the company's underlying fundamentals.






16. A measure of goodness-of-fit of a regres-sion that is adjusted for degrees of freedom and hence does not automatically increase when another independent variable is added to a regression.






17. Assets and liabili-ties that are not monetary assets and liabilities. Nonmonetary assets include inventory - fixed assets - and intangibles - and nonmonetary liabili-ties include deferred revenue.






18. An esti-mate of a country's equity risk premium that is based upon the historical averages of the risk-free rate and the rate of return on the market portfolio.






19. With reference to investmentselection processes - an approach that involves selection from all securities within a specified investment universe - i.e. - without prior narrowiNg of the universe on the bas' s of macroeconomj c or overall market consid






20. A measure of correlation applied to ranked data.






21. The existence of an exact linear relation between two or more independent vari-ables or combinations of independent variables.






22. An electronic payment network available to businesses - individuals - and financial institutions in the United States - U.S. -Territories - and Canada.






23. The naturalloga-rithm of 1 plus the holding period return - or equivalently - the natural logarithm of the ending price over the beginning price.






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






25. In reference to <wrporate taxes a split-rate system taxes earnings to be distributed as dividends at a different rate than earnings to be retained. Corporate profits distributed as dividends are taxed at a lower rate than those retained in the busine






26. An amount equal to net taxes minus government expenditure on goods and services.






27. Observations on characteristic(s) of the same observational unit through time.






28. The capital structure at which the value of the company is maximized.






29. A transaction between two affiliates - an investor company and an associate company such that the investor company records a profit on its income statement. An example is a sale of inven-tory by the investor company to the associate.






30. An act passed by the U.S. Con-gress in 1933 that specifies the financial and other significant information that investors must receive when securities are sold - prohibits misrepresenta-tions - and requires initial registration of all public issuance






31. The sum of the observations divided by the number of observations.






32. An approach to recognizing credit losses on customer receivables in which the company waits until such time as a customer has defaulted and only then recognizes the loss.






33. The standard deviation of active returns.






34. The present value of an investment's cash inflows (benefits) minus the present value of its cash outflows (costs).






35. The intercept and slope coefficient(s) of a regression.






36. The excess of assets over liabilities; the residual interest of shareholders in the assets of an entity after deducting the entity's liabilities.

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37. A possible value of a random variable.






38. The fair value of the estimated costs to be incurred at the end of a tangible asset's service life. The fair value of the liability is determined on the basis of discounted cash flows.






39. A theory of economic growth that proposes that real CDP per person grows because technological change induces a level of saving and investment that makes capital per hour oflabor grow.






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






41. Investments in which investors exert significant influence - but not con-trol - over the investee. Typically - the investor has 20 to 50 % ownership in the investee.






42. A guarantee from the clear-inghouse that if one party makes money on a transaction - the clearinghouse ensures it will be paid.






43. The strategy a company fol-lows with regard to the amount and timing of div-idend payments.






44. The quantity of real CDP pro-duced by an hour of labor.






45. 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






46. All members of a specified group.






47. The value per share of a no-growth company - equal to the expected level amount of earnings divided by the stock's req uired rate of return.






48. A financial covenant made in conjunction with existing debt that restricts a company's ability to incur additional debt at the same seniority based on one or more financial tests or conditions.






49. A rule explaining the expected value of a random vari-able in terms of expected values of the random variable conditional on mutually exclusive and exhaustive scenarios.






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






Can you answer 50 questions in 15 minutes?



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