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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. Plan in which the company promises to pay a certain annual amount (defined benefit) to the employee after retirement. The company bears the investment risk of the plan assets .






2. 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.






3. A contract in which the under-lying asset is oil - a precious metal - or some other commodity.






4. An option in which the underlying is a stock index.






5. The owners of a joint venture. Each is active in the management and shares control of the joint venture.






6. Public-company com-parables for the company being valued.






7. A solvency ratio measuring the number of times interest and lease payments are covered by operating income - calculated as (EBIT + lease payments) divided by (interest payments + lease payments).






8. A measure of a bond's price sen-sitivity to interest rate movements. Equal to the Macaulay duration of a bond divided by one plus its yield to maturity.






9. An option on the yield spread on a bond.






10. A finan-cial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its oper-ations; equal to days of inventory on hand + days of sales outstanding - number of days of






11. The owner of an asset that grants the right to use the asset to another party.






12. A type of interest rate swap in which the floating payment is set at the end of the period and the interest is paid at that same time.






13. The prooability of an observation - given a par ticular set of conditions.






14. European option An option contract that can only be exercised on its expiration date.






15. The probability of correctly rejecting the null-that is - rejecting the null hypothesis when it is false.






16. Economic characteristics of a busi-ness such as profitability - financial strength - and risk.






17. The date of the final paymen on a swap' also - the swap's e piration date.






18. Serial correlation in which a positive error for one observation increases the chance of a positive error for another observation - and a negative error for one observation increases the chance of a negative error for another observation.






19. An agreement allowing the lessee to use some asset for a period of time; essentially a rental.






20. A common or underlying element with which several variables are correlated.






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






22. 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






23. The cost of debt financing to a com-pany - such as when it issues a bond or takes out abank loan.






24. A listing in which tile order of tile listed items does not matter.






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






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






27. The value of the U.S. dollar expressed in units of foreign currency per U.S. dollar.






28. The income tax owed by the company on the basis of taxable income.






29. A financial statement that provides information about a company's prof-itability over a stated period of time.






30. A quantitative measure that describes the location or distribution of data; includes not only measures of central tendency but also other measures such as percentiles.






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






32. The price paid to buy an asset.






33. The amount of time between check issuance and a check's clearing back against the company's account.






34. A variation of the market approach; establishes a value estimate based on the observed multiples from trading activity in the shares of public companies viewed as reasonably comparable to the subject private company.






35. A procedure used in certain deriva-tive transactions that specifies that the long and short parties engage in the equivalent cash value of a delivery transaction.






36. A measurement scale that not only ranks data but also gives assurance that the differ-ences between scale values are equal.






37. 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.






38. 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






39. A balance sheet asset that arises when an excess amount is paid for income taxes relative to accounting profit. The taxable income is higher than accounting profit and income tax payable exceeds tax expense. The company expects to recove r the differ






40. PIE (or forward PIE or prospective PIE) A stock's current price divided by the next year's expected earnings.






41. A specifi-cation of how 'value' is to be understood in the context of a specific valuation.






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






43. The original time to maturity on a swap.






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






45. Probabilities reflecting beliefs prior to the arrival of new information.






46. The return that aninvestor earns during a specified holding period;holding period re turn with reference to a fixed-income instuument.






47. A correlation that misleadingly points towards associations between variables.






48. 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






49. An operating segment or one level below an operating segment (referred to as a component) .






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