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. The quality of being relatively unaffected by a violation of assumptions.






2. The expected return on equi-ties minus the risk-free rate; the premium that investors demand for investing in equities.






3. Futures contracts in which the underlying is a stock - bond - or currency.






4. The mix of debt and equity that a company uses to finance its business; a company's specific mixture of long-term financing.






5. Amounts owed by a business to credi-tors as a result of borrowings that are evidenced by (short-term) loan agreements. n-Period moving average The average of the current and immediately prior n - 1 values of a time series.






6. An estimate of the equity risk pre-mium that is based upon estimates provided by a panel of finance experts.






7. The probabili ty that a confi-dence interval ind udes the unknown population parameter.






8. Hirschman Index A measure of rna ket concentration that is calculated by summing the squared mar et shares for competing companies in an industry; high HHI readings or mergers that would result in large HHI increases are more likely to result in regu






9. Probabilities that generally do not vary from person to person; includes a pri-ori and objective probabilities.






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






11. A result in probability theory stating that inconsistent probabilities create profit opportunities.






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






13. An offset to revenue reflecting any cash refunds - credits on account - and discounts from sales prices given to cus-tomers who purchased defective or unsatisfactory items.






14. Segment revenue divided by seg-ment assets .






15. The mix of a company's variable costsand fixed costs.






16. FRA A contract in which the initial value is intentionally set at a value other than zero and therefore requires a cash payment at the start from one party to the other.






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






18. The autocorrelation of the error term.






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






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






21. The ability to react and adapt to financial adversities and opportunities.






22. A variation of a forward contract that has essentially the same basic definition but with some additional features - such as a clearing-house guarantee against credit losses - a daily settlement of gains and losses - and an organized electronic or fl






23. A level of inventory beyond anticipated needs that provides a cushion in the event that it takes longer to replenish inventory than expected or in the case of greater than expected demand.






24. The Eurodollar rate at which London banks lend dollars to other London banks; considered to be the best representative rate on a dollar borrowed by a private - high-quality borrower.






25. Fixed-income secuntles in which the holder of the security has the right to withhold payment of the full amount due at matu-ri ty if a credi t even t occurs.






26. Uncorrelated; at a right angle.






27. The difference between the yield on a bond and the yield on a default-free security - usu-ally a government note - of the same maturity. The yield spread is primarily determined by the mar-ket's perception of the credit risk on the bond.






28. Common sharehold-ers' equity minus intangible assets from the bal-ance sheet - divided by the number of shares outstanding.






29. The price multiple for a stock assumed to hold at a stated future time.






30. Approach that values a private company based on the values of the underlying assets of the entity less the value of any related liabilities.






31. 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.






32. 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.






33. A merger involving companies at different positions of the same production chain; for example - a supplier or a distributor.






34. The value to a specific buyer - tak-ing account of potential synergies based on the investor's requirements and expectations.






35. A valuation that sums the estimated values of each of a company's busi-nesses as if each business were an independent going concern.






36. A statistical test for differ-ences based on paired observations drawn from samples that are dependent on each other.






37. Valuation measures and other factors related to share price or the trading characteristics of the shares - such as earn-ings yield - dividend yield - and book-to-market value.






38. A scheme of measuring differ-ences. The four types of measurement scales are nominal - ordinal - interval - and ratio.






39. The amount of income earned during a period per share of common stock.






40. The process by which options and other derivatives are priced by treating investors as though they were risk neutral.






41. An investment strategy in which an investor constructs a portfolio to mirror the per-formance of a specified index.






42. Momentum indicators based on price.






43. The net amount of cash provided from operating activities.






44. The most frequently occurring value in a set of observations.






45. An option that allows the holder to buy (if a call) or sell (if a put) an underlying cur-rency at a fixed exercise rate - expressed as an exchange rate.






46. Desired investment outcomes; includes risk objectives and return objectives.






47. An option strategy that combines a bull spread and a bear spread having two differentexercise prices - which produces a risk-free payoffof the difference in the exercise prices.






48. The value derived using a sum-of-the-parts valuation.






49. The day that the company actually mails out (or electronically transfers) a dividend payment.






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