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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. The annual return that an investor earns on a bond if the investor purchases the bond today and holds it until maturity.






2. A rule that states that the number of years it takes for the level of a variable to double is approximately 70 divided by the annual percent-age growth rate of the variable.






3. The probability that an asset's value moves up.






4. A hypothesis concern-ing pricing behavior that holds that even though there are only a few firms in an industry - they are forced to price their products more or less com-petitively because of the ease of entry by outsiders. The key aspect of a conte






5. The probability of an event estimated as a relative frequency of occurrence.






6. A business's value under a going-concern assumption.






7. A form of active strategy which entails scheduling maturities on a systematic basis within the investment portfolio such that invest-ments are spread out equally over the term of the ladder.






8. Assets and liabilities with value equal to the amount of currency con-tracted for - a fixed amount of currency. Examples are cash - accounts receivable - mortgages receiv-able - accounts payable - bonds payable - and mort-gages payable. Inventory is






9. The probability of a Type I error in testing a hypothesis.






10. An approach for estimating a country's equity risk premium. The market rate of return is estimated as the sum of the dividend yield and the growth rate in dividends for a market index. Subtracting the risk-free rate of return from the estimated marke






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






12. Any departure of the market price of an asset from the asset's estimated intrinsic value.






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






14. A transaction executed inthe foreign exchange market in which a currencyis purchased (sold) and a forward contract is sold(purchased) to lock in the exchange rate forfuture delivery of the currency. This transactionshould earn the risk-free rate of t






15. 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) .






16. Amounts that a business owes to its vendors for goods and services that were pur-chased from them but which have not yet been paid.






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






18. A subset of a population.






19. A type of finance lease - from a lessor perspective - where the present value of the lease payments (lease receivable) exceeds the carrying value of the leased asset. The revenues earned by the lessor are operating (the profit on the sale) and financ






20. A regression that expresses the dependen t and independent vari-ables as natural logarithms.






21. A wholly-owned sub-sidiary of a company that is established to provide financing of the sales of the parent company.






22. A balance sheet asset that arises when an excess amount is paid for income taxes relative to accounting profit. The taxable income is higher than accounting profit and income tax payable exceeds tax expense. The company expects to recove r the differ






23. A country that during its entire his-tory has borrowed more in the rest of the world than other countries have lent in it.






24. An exchange rate pegged at a value decided by the government or central bank and that blocks the unregulated forces of demand and supply by direct intervention in the foreign exchange market.






25. Aka Harmonic mean.






26. Small numbers of observations at either extreme (small or large) ofa sample.






27. An intangible that cannot be acquired singly and that typically possesses an indefinite benefit period; an example is account-ing goodwill.






28. The remaining (undepreciated) bal-ance of an asset's purchase cost. For liabilities - the face value of a bond minus any unamortized dis-count - or plus any unamortized premium.






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






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






31. The condition of being of sufficient importance so that omission or misstatement of the item in a financial report could make a differ-ence to users' decisions.






32. 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.






33. A number between - 1 and + 1 that measures the co-movement (linear association) between two random variables.






34. The owner of an asset that grants the right to use the asset to another party.






35. The property of having a constantvariance; refers to an error term that is constantacross observations.






36. Revenue that has been earned but not yet billed to customers as of the end of an accounting period.






37. Huidity When receipts lag - creating pres-sure fmm the decreased available funds.






38. The percentage of total earnings paid out in dividends in any given year (in per-share terms - DPS/ EPS).






39. Costs (e.g. - executives' salaries) that cannot be directly matched with the timing of rev-enues and which are thus expensed immediately.






40. A tabular display of data summarized into a relatively small number of intervals.






41. A record of the change in official reserves - which are the government's holdings offoreign currency.






42. Momentum indicators based on price.






43. A theory of regulatory behavior that predicts that regulators will eventually be cap-tured by special interests of the industry being regulated.






44. Each component put option in a floor.






45. A method of account-ing for joint ventures where the venturer's share of the assets - liabilities - income and expenses of the joint venture are combined on a line-by-line basis with similar items on the venturer's financial statements.






46. 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.






47. A depreciation method that allocates evenly the cost of a long-lived asset less its estimated residual value over the estimated useful life of the asset.






48. An option strategy in which a position in an asset is converted to a risk-free position with a position in a specific number of options. The number of options per unit of the underlying changes through time - and the position must be revised to maint






49. Internal or external limita-tions on investments.






50. Resources controlled by an enterprise as a result of past events and from which future eco-nomic benefits to the enterprise are expected to flow.