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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. 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






2. The value of skills and knowledgepossessed by the workforce.






3. The amount of funds originally invested in a project or instrument; the face value to be paid at maturity.






4. In the context of customer receipts - the amount of money that is in transit between pay-ments made by customers and the funds that are usable by the company.






5. FIrm The cash flow available to the company's suppliers of capital after all operat-ing expenses (including taxes) have been paid and necessary investments in working and fixed capital have been made.






6. The ratio of the percentage change in net income to the percentage change in units sold; the sensitivity of the cash flows to owners to changes in the number of units pro-duced and sold.






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






8. The differ-ence between reported net income on an accrual basis and the cash flows from operating and investing activities compared to the average net operating assets over the period.






9. The uncertainty associated with tax laws.






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






11. A method of identifying the basic elements of the overall capitalization rate.






12. The number of units produced and sold at which the company's net income is zero (revenues = total costs).






13. A country that is borrowing more from the rest of the world than it is lending to it.






14. Unsecured short-term corporate debt that is characterized by a single payment at maturity.






15. A contract that spans a number of accounting periods.






16. A record of foreign investment in a country minus its investment abroad.






17. An option in which the underlying is a bond; primarily traded in over-the-counter markets.






18. An option strategy that combines two bull or bear spreads and has three exercise prices.






19. A person or organization seeking to profit by acquiring a company and reselling it - or seeking to profit from the takeover attempt itself (e.g. - greenmail).






20. With reference to a time series - the underly-ing model generating the times series.






21. The part of the execution step of the portfolio management process that involves the implementation of port-folio decisions by trading desks.






22. The rate of return that must be met fora project to be accepted.






23. An estimation method based on the criterion of minimizing the sum of the squared residuals of a regression.






24. The U.S. interest rate minus the foreign interest rate.






25. A quantitative measure of skew (lack of symmetry); a synonym of skew.






26. A financial statement that reconciles the beginning-of-period and end-of-period balance sheet values of shareholders' equity; provides information about all factors affecting shareholders' equity.

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27. Method used under IFRS to estimate the defined benefit obligation; for each period in which employees provide services - they earn a portion of the post-employment bene-fits that the company has promised to pay.






28. A process used in a deliverable forward contract in which the long pays the agreed-upon price to the short - which in turn delivers the underlying asset to the long.






29. 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






30. With reference to events - the propertythat the probability of one event occurringdepends on (is related to) the occurrence ofanother event.






31. An activity ratio equal to the number of days in period divided by receivables turnover.






32. An approach to valuing natu-ral resource companies that estimates company value on the basis of the market value of the natu-ral resources the company controls.






33. A variation of VAR that reflects the risk of a company's cash flow instead of its market value.






34. The difference between the market price of the option and its intrinsic value - determined by the uncertainty of the underlying over the remaining life of the option.






35. An approach to investing that typically begins with macroeconomic forecasts.






36. A reduction in proportional ownership inter-est as a result of the issuance of new shares.






37. Options that are far in-the-money.






38. The risk that govern-mental laws and regulations directly or indirectly affecting a company's operations will change with potentially severe adverse effects on the com-pany's continued profitabiliny and even its long-term sustainability.






39. Approach to trans-lating foreign currency financial statements for consolidation in which monetary assets and liabil-ities are translated at the current exchange rate. Nonmonetary assets and liabilities are translated at historical exchange rates (th






40. The hypothesis to be tested.






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






42. Cannibalization occurs when an investment takes customers and sales away from another part of the company.






43. 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.






44. Rate of return that dis-counts future cash flows from an investment to the exact amount of the investment; the discount rate that makes the present value of an invest-ment's costs (outflows) equal to the present value of the investment's benefits (in






45. A procedure for determining the interest on a loan or bond in which the interest is deducted from the face value in advance.






46. A sample measure of the degree of dispersion of a distribution - calculated by dividing the sum of the squared deviations from the sam-ple mean by the sample size minus 1.






47. A measure of central tendency computed by taking the nth root of the product of n non-negative values.






48. The annual percentage change in real CDP.






49. The risk associated with changes in the relative attractiveness of products and services offered for sale - arising out of the competitive effects of changes in exchange rates.






50. In using the method of com parables - the value of a price mul-tiple for the comparison asset; when we have com-parison assets (a group) - the mean or median value of the multiple for the group of assets.