Test your basic knowledge |

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






2. The number of successes in n Bernoulli trials for which the probability of success is constan t for all trials and the trials are independent.






3. Reward-to-volatility ratio; ratio of portfolio excess return to standard deviation.

Warning: Invalid argument supplied for foreach() in /var/www/html/basicversity.com/show_quiz.php on line 183


4. Aka 'Residual income.'






5. Uncorrelated; at a right angle.






6. A factor related to the econ-omy - such as the inflation rate - industrial produc-tion - or economic sector membership. acroeconomic factor model A multifac tor model in which the factors are surprises in macroeco-nomic variables that significan tly






7. A company without positive expected net present value projects.






8. A theory of economic growth based on the view that the growth of real GDP per person is temporary and that when it rises above subsistence level - a population explo-sion eventually brings it back to subsistence level.






9. The value of an option at expiration.






10. An option strategy in which a long position in a certain number of options is offset by a short position in a certain number of other options on the same underlying - resulting in a risk-free position.






11. The value per share of a no-growth company - equal to the expected level amount of earnings divided by the stock's req uired rate of return.






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






13. Potential future payments to the seller that are contingent on the achieve-ment of certain agreed on occurrences.






14. In the context ofmerger analysis - it is an estimate of a target com-pany's value found by discounting the company's expected future free cash flows to the present.






15. The expected value (the probability-weighted average) of squared deviations from a random variable's expected value.






16. A valuation ratio calculated as price per share divided by cash flow per share.






17. The date on which a derivative con-tract expi res.






18. A minimum level of cash to be held available-estimated in advance and adjusted for known funds transfers - seasonality - or other factors.






19. Costs that remain at the same level regardless of a company's level of production and sales.






20. The setting of overall policies and standards in risk management






21. All members of a specified group.






22. The risk attributed to the operating cost structure - in particular the use of fixed costs in operations; the risk arising from the mix of fixed and variable costs; the risk that a company's operations may be severely affected by environ-mental - soc






23. A probability distri-bution for a group of random variables that is completely defined by the means and variances of the variables plus all the correlations between pairs of the variables.






24. Momentum indicators based on price.






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






26. Company growth in output or sales that is achieved by making investments internally (i.e. - excludes growth achieved through mergers and acquisitions).






27. Any outcome or specified set of outcomes of a random variable.






28. A money measure of the mini-mum value of losses expected during a specified time period at a given level of probability.






29. The possession of monopoly power in the relevant market and the willful acquisition or maintenance of that power - as distinguished from growth or development as a consequence of a superior product - business acumen - or historical accident.






30. 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






31. A legal restriction that dividends cannot exceed retained earnings.






32. A function that specifies the probability that the random variable takes on a specific value.






33. Cannibalization occurs when an investment takes customers and sales away from another part of the company.






34. Analysis that shows the changes in key financial quantities that result from given (economic) events - such as the loss of customers - the loss of a supply source - or a catastrophic event; a risk management technique involving examina-tion of the pe






35. The combination of the underlying - puts - calls - and risk-free bonds that replicates a forward contract.






36. A conventional cash flow pattern is one with an ini tial outflow followed by a series of in ows.






37. A graphical representa-tion of the expected return and risk of all portfo-lios that can be formed using two assets.






38. 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.






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






40. Equity shares that are subordinate to all other types of. equity (e.g. - p refe rred equi ty) .






41. The strategy a company fol-lows with regard to the amount and timing of div-idend payments.






42. The process of accumulating interest on interest.






43. The ratio of gross profi t to revenues.






44. A variation of the monetary/ nonmonetary translation method that requires not only monetary assets and liabilities - but also nonmonetary assets and liabilities that are mea-sured at their current value on the balance sheet date to be translated at t






45. The set of assets available for investment.






46. The variable whose variationabout its mean is to be explained by the regres-sion; the left-hand-side variable in a regressionequation.






47. An experiment that can produce one of two outcomes.






48. 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.






49. Instruments that payinterest as the difference between the amountborrowed and the amount paid back.






50. With reference to fundamental factor models - the value of the attribute for an asset minus the average value of the attribute across all stocks - divided by the standard deviation of the attribute across all stocks.