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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 process of determining the value of an asset or service on the basis of variables per-ceived to be related to future investment returns - or on the basis of comparisons with closely similar assets.






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






3. The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or groups of assets.






4. The competitive strategy of seeking a compet-itive advantage within a target segment or seg-ments of the industry - either on the basis of cost leadership (cost focus) or differen tiation (differ-entiation focus) .






5. The ratio ofthe percentage change in operating income to the percentage change in units sold; the sensitivity of operating income to changes in units sold.






6. A depreciation method that allocates evenly the cost of a long-lived asset less its estimated residual value over the estimated useful life of the asset.






7. An association or relationship between variables that cannot be graphed as a straight line.






8. A qualitative-dependent-variable multi-ple regression model based on the logistic proba-bility distribution.






9. The probability of an event not conditioned on another event.






10. The use of accounts receivable as collateral for a loan.






11. A variation of the monetary/ nonmonetary translation method that requires not only monetary assets and liabilities - but also nonmonetary assets and liabilities that are mea-sured at their current value on the balance sheet date to be translated at t






12. The percentage of a market that a particular fi rm supplies; used as the primary measure of monopoly power.






13. A qualitative-dependent-variable multiple regression model based on the normal distribution.






14. Analysis that involves com-parisons across individuals in a group over a given time period or at a given point in time.






15. A time series regressed on its own past values - in which the independent vari-able is a lagged value of the dependent variable.






16. A method of revenue recognition in which - in each accounting period - the company estimates what percentage of the contract is complete and then reports that per-centage of the total contract revenue in its income statement.






17. A swaption that allows the holder to enter into a swap as the fixed-rate payer and floating-rate receiver.






18. A measure of th e yield on the undel~ ing bond of a futures contract implied by pricing it as though the underlying will be delivered at the futures expiration.






19. A subset of a larger popula-tion created in such a way that each element of the population has an equal probability of being selected to the subset.






20. A minimum level of cash to be held available-estimated in advance and adjusted for known funds transfers - seasonality - or other factors.






21. A measurement scale that categorizes data but does not rank them.






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






23. A tabular display of data summarized into a relatively small number of intervals.






24. With reference to equity investors - investors who seek to invest in high-earnings-growth companies.






25. A weighted average of the after-tax required rates of return on a company's common stock - preferred stock - and long-term debt - where the weights are the fraction of each source of financing in the company's target capital structure.






26. An illiquidity discount that occurs when an investor sells a large amount of stock rela-tive to its trading volume (assuming it is not large enough to constitute a controlling ownership).






27. With reference to statisti. cal inference - the subdivision dealing with estimating the value of a population parameter.






28. Carlo simulation method An approach to estimating a probability distribution of outcomes to examine what might happen if particular risks are faced. This method is widely used in the sci-ences as well as in business to study a variety of problems.






29. A reduction in the value of an asset as stated in the balance sheet.






30. The sum of the sample observations - divided by the sampfe size.






31. A liquidity ratio calculated as current assets divided by current liabilities.






32. A trader who typically holds posi-tions open overnight.






33. The property of having a non-constant variance; refers to an error term with the property that its variance differs across observations.






34. A type of qualitative variable that takes on a value of 1 if a particular condition is true and 0 if that condition is false.






35. A numerical measure of how sensitive an option's delta is to a change in the underlying.






36. Ratios that measure how efficiently a company performs day-to-day tasks - such as the collection of receivables and management of inventory.






37. A procedure by which a population is divided into subpopulations (strata) based on one or more classification criteria. Sim-ple random samples are then drawn from each stratum in sizes proportional to the relative size of each stratum in the populati






38. The number of observations in a given interval (for grouped data) .






39. The probability of an event estimated as a relative frequency of occurrence.






40. The setting of overall policies and standards in risk management






41. A European-style option with a value at maturity equal to the difference between the stock price at maturity and the average stock price during the life of the option - or $0 - whichever is greater.






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






43. The rate at which an option's time value decays.






44. A rule that states that the number of years it takes for the level of a variable to double is approximately 70 divided by the annual percent-age growth rate of the variable.






45. A capital rationing environment assumes that the company has a fixed amount of funds to invest.






46. A random variable that can take on at most a countable number of possi-ble values.






47. A result in statistics that states that the sample mean computed from large sam-ples of size n from a population with finite vari-ance will follow an approximate normal distribution with a mean equal to the population mean and a variance equal to the






48. A measure of the co-movement (linearassociation) between two random variables.






49. Costs that remain at the same level regardless of a company's level of production and sales.






50. An investment decision rule that accepts projects or investments for which the IRR is greater than the opportunity cost of capital.