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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 descriptive measure computed from or used to describe a population of data - convention-ally represented by Greek letters.






2. The posi tive square root of tar-get semivar·ance.






3. An annuity having a first cash flow that is paid immediately.






4. Any action other than a tariff that restricts international trade.






5. An equation describing the expected return on any asset (or portfolio) as a linear function of its beta relative to the market portfolio.






6. 1) The simultaneous purchase of an undervalued asset or portfolio and sale of an over-valued but equivalent asset or portfolio - in order to obtain a riskless profit on the price differential. Taking advantage of a market inefficiency in a risk-free






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






8. An estimate of the average time that elapses between paying suppliers for materi-als and collecting cash from the subsequent sale of goods produced.






9. The average squared deviation below the mean.






10. A means of settling payments in which the amount owed by the first party to the second is netted with the amount owed by the sec-ond party to the first; only the net difference is paid.






11. With reference to statistical inference - astatement about one or more populations.






12. In a nonconventional cash flow pattern - the initial outflow is not fol-lowed by inflows only - but the cash flows can flip from positive (inflows) to negative (outflows) again (or even change signs several times).






13. An option strategy involving the hold-ing of an asset and sale of a call on the asset.






14. An international organi-zation that places greater obligations on its mem-ber countries to observe the GATT rules.






15. The set of assets available for investment.






16. A third party that is sough t out bX the tar-get c0mpany's board to Burchase a substantial minority stake in the target-enough to block a hostile takeover without selling the entire company.






17. A value against which a computed test statistic is compared to decide whether to reject or not reject the null hypothesis.






18. Covering or containing all possible outcomes.






19. The residuals from a fitted time-series model within the sample period used to fit the model.






20. An option in which the holder has the right to make an unknown interest payment and receive a known interest payment.






21. ROA) A prof-itability ratio calculated as operating income divided by average total assets.






22. The standard deviation of the differ-ence in returns between an active investment portfolio and its benchmark portfolio; also called tracking error volatility - tracking risk - and active risk.






23. An electronic payment system used widely in Europe and Japan.






24. FIrm model A model of stock valuation that views the value of a firm as the pres-ent value of expected future free cash flows to the firm.






25. A merger involving the pur-chase of a target ahead of the acquirer in the value or production chain; for example - to acquire a supplier.






26. The expansion of production pos-sibilities that results from capital accumulation and technological change.






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






28. A finance perspective on capital markets that deals with the relationship of price to intrinsic value. The traditional efficient mar-kets formulation asserts that an asset's price is the best available estimate of its intrinsic value. The rational ef






29. A quantitative measure that specifies where data are centered.






30. The process of systematically allocat-ing the cost of long-lived (tangible) assets to theperiods during which the assets are expected toprovide economic benefits.






31. The difference between the maximum and minimum values in a dataset.






32. Observations over individual units at a point in time - as opposed to time-series data.






33. When a bankrupt company is allowed to enforce contracts that are favorable to it while walking away from contracts that are unfa-vorable to it.






34. Amounts owed to the company from parties other than customers.






35. A regression assumption violation that occurs when two or more independent vari-ables (or combinations of independent variables) are highly but not perfectly correlated with each other.






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






37. The actual cash that would be avail-able to the company's investors after making all investments necessary to maintain the company as an ongoing en terprise (also referred to as free cash flow to the firm); the internally generated funds that can be






38. The difference between operat-ing assets (total assets less cash) and operating lia-bilities (total liabilities less total debt).






39. An option that gives the holder the right to sellan underlying asset to another party at a fixedprice over a specific period of time.






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






41. An option strategy involving the purchase of two calls and one put.






42. The principle that dol-lar amounts indexed at the same point in time are additive.






43. A measure of sensitivity; the incremental change in one variable with respect to an incre-mental change in another variable.






44. The positive square root of the sample variance.






45. Forecasted dividends per share over the next year divided by current stock price.






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






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






48. The risk associated with operating earnings. Operating earnings are uncertain because total revenues and many of the expendi-tures contributed to produce those revenues are uncertain.






49. 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.






50. Observations through time on a single characteristic of multiple observational units.