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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. A theory of regulatory behavior that holds that regulators must take account of the demands of three groups: legislators - who established and oversee the regulatory agency; firms in the regulated industry; and consumers of the regulated indus-try's






2. A test in which the null hypothesis is rejected only if the evidence indicates that the population parameter is greater than (smaller than) eo- The alternative hypothesis also has one side.






3. The owners' remaining claim on the company's assets after the liabilities are deducted.






4. The perceived ability of the bor-rower to pay what is owed on the borrowing in a timely manner; it represents the ability of a com-pany to withstand adverse impacts on its cash flows.






5. Is Derivatives in which the payoffs occur if a specific event occurs; generally referred to as options.






6. An activity ratio equal to rev-enue divided by average receivables.






7. The ratio of P I E-ta-growt - calculated as the stock's P /.E divided by the expected earnings growth rate in percent.






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






9. The variable whose variationabout its mean is to be explained by the regres-sion; the left-hand-side variable in a regressionequation.






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






11. American Free Trade Agreement An agree-ment - which became effective on January 1 - 1994 - to eliminate all barriers to international trade between the United States - Canada - and Mexico after a 15-year phasing-in period.






12. A merger or acquisition in which target shareholders are to receive shares of the acquirer's common stock as compensation.






13. A type of finance lease - from a lessor perspective - where the present value of the lease payments (lease receivable) exceeds the carrying value of the leased asset. The revenues earned by the lessor are operating (the profit on the sale) and financ






14. Quantiles that divide a distribution into five equal parts.






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






16. A widely used approach to estimate an overall capitalization rate. It is based on the premise that debt and equity financ-ing is typically involved in a real estate transaction.






17. A test in which the null hypothesis is rejected in favor of the alternative hypothesis if the evidence indicates that the population param-eter is either smaller or larger than a hypothe-sized value.






18. A merger involving companies at different positions of the same production chain; for example - a supplier or a distributor.






19. A prof -itabili ty ratio calculated as operating income (i.e. - income before inte est and taxes) divided by revenue.






20. A merger or acquisition that is to be paid for with cash - securities - or some combina-tion of the two.






21. The relationship amongputs - calls - and forward contracts.






22. A variation of a straddle in which the put and call have different exercise prices.






23. A random variable for which the range of possible outcomes is the real line (all real numbers between (-00 and +(0) or some subset of the real line.






24. A valuation ratio calculated as price per share divided by cash flow per share.






25. 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.






26. An acquisition in which the acquirer purchases the target company's assets and pay-ment is made directly to the target company.






27. A variation of VAR that reflects the risk of a company's earnings instead of its market value.






28. Limits imposed by a futures exchange on the price change that can occur from one day to the next.






29. A swap in which the underlying is an interest rate. Can be viewed as a currency swap in which both currencies are the same and can be created as a combination of currency swaps.






30. An option strategy involving the purchase of a put and sale of a call in which the holder of an asset gains protection below a certain level - the exercise price of the put - and pays for it by giving up gains above a certain level - the exercise pri






31. A business owned and operated by more than one individual.






32. An option strategy that involves buying a call with a lower exercise price and selling a call with a higher exercise price. It can also be exe-cuted with puts.






33. Any outcome or specified set of outcomes of a random variable.






34. 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.






35. The absorption of one company by another; two companies become one entity and one or both of the pre-merger companies ceases to exist as a separate entity.






36. The differential of infor-mation between corporate insiders and outsiders regarding the company's performance and prospects. Managers typically have more informa-tion about the company's performance and prospects than owners and creditors.






37. The difference between current assets and current liabilities.






38. The evaluation of risk-adjusted performance; the evaluation of invest-ment skill.






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






40. Each value on a binomial tree from which suc-cessive moves or outcomes branch.






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






42. The concept that dividends paid now displace earnings in all future periods.






43. Expectations that differfrom consensus expectations.






44. A function that specifies the probability that the random variable takes on a specific value.






45. Accounting in which some income items are reported as part of stockholders' equity rather than as gains and losses on the income statement; certain items of comprehensive income bypass the income statement and appear as direct adjustments to sharehol






46. The distribution of all distinct possible values that a statistic can assume when computed from samples of the same size ran-domly drawn from the same population.






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






48. Segment liabilities divided by segment assets.






49. The use of an inaccurate pricing model for a particular investment - or the improper use of the right model.






50. Regulation that seeks to keep the rate of return in the industry at a com-petitive level by not allowing excessive prices to be charged.