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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 positive square root of the variance; a measure of dispersion in the same units as the original data.






2. The percentage of total earnings paid out in dividends in any given year (in per-share terms - DPS/ EPS).






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






4. Provision for a return of invest-ment - net of value appreciation.






5. The average rate of return in excess of the risk-free rate.






6. Trading ex-dividend refers to shares that no longer carry the right to the next dividend payment.






7. An option contract that can be exercised at any time until its expiration date.






8. For accounting purposes - the spot exchange rate on the balance sheet date.






9. The risk associated with the conversion of foreign financial statements into domestic currency.






10. A reduction or discount to value for shares that are not publicly traded.






11. An act passed by the U.S. Congress in 1934 that created the Securi-ties and Exchange Commission (SEC) - gave the SEC authority over all aspects of the securities industry - and empowered the SEC to require peri-odic reporting by companies with public






12. A combination of interest rate put options designed to hedge a lender against lower rates on a floating-rate loan.






13. A form of restructuring that involves the creation of a new legal entity and the sale of equity in it to outsiders.






14. The purchase of the accumulated shares of a hostile investor by a company that is targeted for takeover by that investor - usually at a substan-tial premium over market price.






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






16. A tactic used by acquirers to circumvent target management's objections to a proposed merger by submitting the proposal directly to the target company's board of directors.






17. A share of any profits that is paid to the general partner (manager) of an investment partnership - such as a private equity or hedge fund - as a form of compensation designed to be an incentive to the manager to maximize per-formance of the investme






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






19. The risk associated with accounting standards that vary from country to country or with any uncertainty about how certain transac-tions should be recorded.






20. The observation that P /Es tend to be high on depressed EPS at the bottom of a business cycle - and tend to be low on unusually high EPS at the top of a business cycle.






21. Valuation indicators that relate either price or a fundamental (such as earnings) to the time series of their own past val-ues (or in some cases to their expected value).






22. A probability distri-bution for a group of random variables that is completely defined by the means and variances of the variables plus all the correlations between pairs of the variables.






23. The purchase of some portion of one company by another; the purchase may be for assets - a definable segment of another entity - orthe purchase of an entire company.






24. 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) .






25. Under U.S. GAAP -a special purpose entity structured to avoid consol-idation that must meet qualification criteria.






26. The time remaining in the life of a derivative - typically expressed in years.






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






28. The value to a specific buyer - tak-ing account of potential synergies based on the investor's requirements and expectations.






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






30. Estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.






31. A specialized computer program or a spreadsheet that solves for the portfolio weights that will result in the lowest risk for a specified level of expected return.






32. All changes in equity other than contributions by - and distributions to - own-ers; income under clean surplus accounting; includes all changes in equity during a period except those resulting from investments by own-ers and distributions to owners;






33. A measure of the time needed to convert raw materials into cash from a sale; it con-sists of the number of days of inventory and the number of days of receivables.






34. A record of receipts from exports of goods and services - payments for imp<ilrts of goods and services - net income and net transfers received from the rest of the world.






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






36. 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.






37. The theory that managers take into account how their actions might be inter-preted by outsiders and thus order their prefer-ences for various forms of corporate financing. Forms of financing that are least visible to out-siders (e.g. - internally gen






38. A profitability ratio calculated as (net income - preferred divi-dends) divided by average common equity; equal to the return on equity ratio when no preferred equity is outstanding.






39. Earnings per share divided by price; the reciprocal of the PIE ratio.






40. Short-term obligations - such as accounts payable - wages payable - or accrued liabil-ities - that are expected to be settled in the near future - typically one year or less.






41. PIE PI Es based on normalized EPS data.






42. A solvency ratio calculated as EBIT divided by interest payments.






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






44. The risk that a financial instrument cannot be purchased or sold without a significant concession in price due to the size of the market.






45. Assets and liabilities with value equal to the amount of currency con-tracted for - a fixed amount of currency. Examples are cash - accounts receivable - mortgages receiv-able - accounts payable - bonds payable - and mort-gages payable. Inventory is






46. Netting the market values of all contracts - not just derivatives - between parties.






47. The difference between reported net income on an accrual basis and the cash flows from operating and investing activities.






48. The system of principles - policies - procedures - and clearly defined responsi-bilities and accountabilities used by stakeholders to overcome the conflicts of interest inherent in the corporate form.






49. Earnings adjusted for nonrecur-ring - non-economic - or other unusual items to elim-inate anomalies andlor facilitate comparisons.






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