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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. An option strategy involving the purchase of two puts and one call.






2. 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.






3. Additional margin that must be deposited in an amount sufficient to bring the balance up to the initial margin requirement.






4. A loan that is secured with com-panyassets.






5. Describes a distribution that is less peaked than the normal distribution.






6. An option strategy involving the purchase of one option and sale of another option that is identical to the first in all respects except either exercise price or expiration.






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






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






9. The price paid to buy an asset.






10. A dividend yield based on the anticipated dividend during the next 12 months.






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






12. A balance sheet liability that arises when a deficit amount is paid for income taxes relative to accounting profit. The taxable income is less than the accounting profit and income tax payable is less than tax expense. The company expects to eliminat






13. The risk associated with changes in the relative attractiveness of products and services offered for sale - arising out of the competitive effects of changes in exchange rates.






14. The sum of market value of common equity - book value of preferred equity - and face value of debt.






15. A valuation ratio calculated as price per share divided by sales per share.






16. A measure of goodness-of-fit of a regres-sion that is adjusted for degrees of freedom and hence does not automatically increase when another independent variable is added to a regression.






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






18. 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






19. A transformation that subtracts the value of the time series in period t - 1 from its value in period t.






20. The amount to which a payment or series of payments will grow by a stated future date.






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






22. The statistical measure that indicates the peakedness of a distribution.






23. Tax expenses that have been recognized and recorded on a company's income statement but which have not yet been paid.






24. With reference to assets - the amount of cash or cash equivalents that could currently be obtained by sell ing the asset i an orderly disposal; with reference to lia-bilities - the undiscounted amount of cash or cash equivalents expected to be paid t






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






26. The expected value of a stated event given that another event has occurred.






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






28. Historical beta adjusted to reflect the tendency of beta to be mean reverting.






29. A standardized measure of systematic risk based upon an asset's covariance with the market portfolio.






30. Assets lacking physical substance - such as patents and trademarks.






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






32. For a give period - equal to begi ning inventory minus entling inventory JDlusthe cost 0 goods auqui red or produced duringthe period.






33. The variance of one variable - given the outcome of another.






34. Factor models that combine features of more than one type of factor model.






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






36. Aka 'Residual income.'






37. An increment or premium to value associated with a controlling ownership interest in a company.






38. Differences between tax and financial reporting of revenue (expenses) that will not be reversed at some future date. These result in a difference between the company's effective tax rate and statutory tax rate and do not result in a deferred tax item






39. An increase in a company's earnings that results as a consequence of the idio-syncrasies of a merger transaction itself rather than because of resulting economic benefits ofthe combination.






40. Lack of bias. A desirable property of estimators - an unbiased estimator is one whose expected value (the mean of its sampling distri-bution) equals the parameter it is intended to estimate.






41. Behavior on the part of a firm that allows it to comply with the letter of the law but violate the spirit - significantly lessening the law's effects.






42. The process of selecting - evaluat-ing - and interpreting financial data in order to formulate an assessment of a company's present and future financial condition and performance.






43. A procedure for determining the interest on a loan or bond in which the interest is deducted from the face value in advance.






44. A balance sheet that does not show subtotals for current assets and current liabilities.






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






46. A business owned and operated by more than one individual.






47. A reduction in the number of shares outstanding with a corresponding increase in share price - but no change to the company's underlying fundamentals.






48. Debt with the added feature that the bondholder has the option to exchange the debt for equity at prespecified terms.






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






50. The cash flow available to a company's common shareholders after all operat-ing expenses - interest - and principal payments have been made - and necessary investments in working and fixed capital have been made.