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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 procedure for determining the interest on a bond or loan in which the interest is added onto the face value of a contract.






2. The quoted interest rate per period; the stated annual interest rate divided by the number of compounding periods per year.






3. 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.






4. The share price at a particular point in the future.






5. Future benefits promised to the employee regardless of continuing service. Bene-fits typically vest after a specified period of service or a specified period of service combined with age.






6. A method of account-ing in which combined companies were portrayed as if they had always operated as a single eco-nomic entity. Called pooling of interests under






7. A statistical model used to clas-sifY borrowers according to creditworthiness.






8. Income rate that reflects the relationship between equity income and equity capital.






9. In reference to short-term cash man-agement - an investment strategy characterized by monitoring and attempting to capitalize on mar-ket conditions to optimize the risk and return relationship of short-term investments.






10. With reference to regression - the set of variables included in the regression and the regression equation's functional form.






11. The difference between the actual value per share and the no-growth value per share.






12. The day that the corporation issues a statement d eclaring a specific dividend.






13. An attempt to take control of a company through a shareholder vote.






14. The graph of the capital asset pricing model.






15. A forward contract calling for one party to make a fixed interest payment and the other to make an interest pay-ment at a rate to be determined at the contract expiration.






16. A company's operating profit with adjustments to normalize the effects of capital structure.






17. An amount equal to net taxes minus government expenditure on goods and services.






18. 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.






19. An extra return that compensates investors for the increased sensitivity of the mar-ket value of debt to a change in market interest rates as maturity is extended.






20. An active investment strategy whereby the timing of cash outflows is not matched with investment maturities.






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






22. 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.






23. A pre-offer takeover defense mech-anism involving the corporate charter (e.g. - stag-gered boards of directors and supermajority provisions) .






24. A dividend payout pol-icy under which earnings in excess of the funds necessary to finance the equity portion of com-pany's capital budget are paid out in dividends.






25. An approach to using price multiples that relates a price multiple to forecasts of fundamentals through a discounted cash flow model.






26. Aka marking to market.






27. A valuation indicator based on past pdce movement.






28. The ratio of a stock's market price to some m asure of va ue per share.






29. The difference between reported earnings per share and expected earnings per share.






30. A poison pill provision that allows for the redemption or cancellation of a poi-son pill provision only by a vote of coNtinuing directors (generally directors who were on the tar-get company's board p rior to the takeover attempt) .






31. The cost to a com pany of issu-ing preferred stock; the dividend yield that a com-pany must commit to pay preferred stockholders.






32. A business owned and operated by a single person.






33. The number of shares that target stockholders are to receive in exchange for each of their shares in the target company.






34. A form of restructuring in which sharehold-ers of a parent company receive a proportional number of shares in a new - separate entity; share-holders end up owning stock in two different companies where there used to be one.






35. 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) .






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






37. A mean computed after assigning a stated percent of the lowest values equal to one specified low value - and a stated percent of the highest values equal to one specified high value.






38. The initial issuance ofcommon stock registered for public trading by a formerly private corporation.






39. A form of centralized risk management that typically encompasses the man-agement of a broad variety of risks - ind uding insuran -ce risk.






40. Individuals or companies b hat execute fu tures transactions for other parties off the exchange.






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






42. An attempt to acquire a com-pany against the wishes of the target's managers.






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






44. The actual return on a debt security if it is held to maturity.






45. In reference to mergers - it is the savings achieved through the consolidation of operations and elimination of duplicate resources.






46. A function giving the probability that a random variable is less than or equal to a specified value.






47. Segment profit (loss) divided by seg-ment assets.






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






49. The actual amount paid for income taxes in the period; not a provision - but the actual cash outflow.






50. The sum of the real risk-free interest rate and the inflation premium.