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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. Commercial and investmentbanks that make markets in derivatives.






2. The difference between the third and fi rst quarti les of a dataset.






3. Fixed-income secuntles in which the holder of the security has the right to withhold payment of the full amount due at matu-ri ty if a credi t even t occurs.






4. Regulation that allowsprices to reflect only the actual average cost ofproduction and no monopoly profits.






5. Analysts who work at brokerages.






6. In reference to short-term cash management - it is an investment strategy charac-terized by simple decision rules for making daily investments.






7. A purchase involving a buyer having essentially no material synergies with the target (e.g. - the purchase of a private company by a company in an unrelated industry or by a private equity firm would typically be a financial transaction) .






8. The goods and sernces that we buy from people in other countries.






9. A dollar deposited outside the United States.






10. When a company is acquired and the purchase price is less than the fai r value of the net assets. The current treatment of the excess of fair value over the purchase price is diffe re t under IFRS and U.S. CAAP. The excess is never accounted for as n






11. Time thought of as advancing in extremely small increments.






12. 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.






13. In reference to corporate taxes - a system that imputes - or attributes - taxes at only one level of taxation. For countries using an imputation tax system - taxes on dividends are effectively levied only at the shareholder rate. Taxes are paid at th






14. Heteroskedasticity in the error variance that is correlated with the values of the independent variable(s) in the regression.






15. With reference to time-series mod-els - a model in which the growth rate of the time series as a function of time is constant.






16. A merger involving the pur-chase of a target that is farther along the value or production chain; for example - to acquire a distributor.






17. Observations of a variable over time.






18. Factors related to the company's internal performance - such as factors relating to earnings growth - earnings variability - earnings momentum - and financial leverage.






19. Desired investment outcomes; includes risk objectives and return objectives.






20. Deliberate activity aimed at influencing reporting earnings numbers - often with the goal of placing management in a favorable light; the opportunistic use of accruals to manage earnings.






21. The time between settlement dates.






22. An approach to investing thatfocuses on the individual characteristics of securi-ties rather than on macroeconomic or overall market forecasts.






23. The mix of a company's variable costsand fixed costs.






24. Aka also enterprise risk management.






25. Another term for the historical method of estimating VAR. This term is somewhat misleading in that the method involves not a simulation of the past butrather what actually happened in the past - some-times adjusted to reflect the fact that a differen






26. The original time to maturity on a swap.






27. A condition in the futures markets in which a transaction cannot take place because the price would be beyond the limits.






28. 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






29. A random variable hav-ing the outcomes 0 and 1.






30. Regression that models the straight-line relationship between the dependent and independen t variable (s) .






31. A pre-offer takeover defense mecha-nism that gives target company bondholders the right to sell their bonds back to the target at a pre-specified redemption price - typically at or above par value; this defense increases the need for cash and raises






32. Assets that are expected to bene-fit the company over an extended period of time (usually more than one year).






33. Total company valme (the market value of debt - common equity - and preferred equity) minus the value of cash and investments.






34. A type of top-down investing approach that involves emphasizing different eco-nomic sectors based on considerations such as macroeconomic forecasts.






35. Debt issued with warrants that give the bondholder the right to purchase equity at prespecified terms.






36. Increases in economic benefits in the form of inflows or enhancements of assets - or decreases of liabilities that result in an increase in equity (other than increases resulting from contribu-tions by owners) .






37. The change in the bond price for a 1 basis point change in yield. Also called basis point value (BPV).






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






39. An option that gives the holder the right to buy an underlying asset from another party at a fixed price over a specific period of time.






40. The condition in a financial mar-ket in which two equivalent financial instruments or combinations of financial instruments can sell for only one price. Equivalent to the principle that no arbitrage opportunities are possible.






41. The amount the company estimates that it can sell the asset for at the end of its useful life.






42. A set of techniques for estimating losses in extremely unfavorable combinations of events or scenarios.






43. A result indicating that the null hypothesis can be rejected; with reference to an estimated regression coefficient - frequently understood to mean a result indicating that the corresponding population regression coefficient is different from O.






44. The relationship between option price and volatility.






45. A procedure of selecting every kth member until reaching a sample of the desired size. The sample that results from this procedure should be approximately random.






46. A strategy used to replicate an index. It is also used to take a given amount of cash and turn it into an equity position while maintaining the liquidity provided by the cash.






47. A legal entity with rights similar to those of a person. The chief officers - executives - or top managers act as agents for the firm and are legally entitled to authorize corporate activi-ties and to enter into contracts on behalf of the business.






48. Asset outflows not directly related to the ordi-nary activities of the business.






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






50. A type of weighted mean computed by averaging the reciprocals of the ohservations - then taking the reciprocal of that average.