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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 bar chart of data that have been grouped into a frequency distribution.






2. A function with non-negative values such that probability can be described by areas under the curve graphing the function.






3. A solvency ratio calculated as total debt divided by total shareholders' equity.






4. The hypothesis to be tested.






5. The condition in futures markets in which futures prices are higher than expected spot prices.






6. 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.






7. A variation of VAR that reflects the risk of a company's cash flow instead of its market value.






8. 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






9. 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.






10. Profits lost from not having suffi-cient inventory on hand to satisfy demand.






11. With reference to statisti. cal inference - the subdivision dealing with estimating the value of a population parameter.






12. The amount of funds originally invested in a project or instrument; the face value to be paid at maturity.






13. An acceler-ated depreciation method that involves depreciat-ing the asset at double the straight-line rate. This rate is multiplied by the book value of the asset at the beginning of the period (a declining balance) to calculate depreciation expense.






14. A measure of th e yield on the undel~ ing bond of a futures contract implied by pricing it as though the underlying will be delivered at the futures expiration.






15. A method of revenue recogni-tion in which the company does not recognize any revenue until the contract is completed; used par-ticularly in long-term construction contracts.






16. A limit move in the futures market in which the price at which a transaction would be made is at or above the upper limit.






17. The after-tax net operating profits as a percent of total assets or capital.






18. A poison pill takeover defense that dilutes an acquirer's ownership in a target by giv-ing other existing target company shareholders the right to buy additional target company shares at a discount.






19. The U.S. interest rate minus the foreign interest rate.






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






21. P/E calculated on the basis of a forecast of EPS; a stock's current price divided by next year's expected earnings.






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






23. A measure of the co-movement (linearassociation) between two random variables.






24. A correlation that misleadingly points towards associations between variables.






25. A transaction whereby the target company management team converts the target to a privately held company by using heavy borrowing to finance the purchase of the target company's outstanding shares.






26. The probability of an event not conditioned on another event.






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






28. The period benefited~y the employee's service - usually th e period between the grant date and the vesting date.






29. A long-term pattern of movement in a partic-ular direction.






30. Public-company com-parables for the company being valued.






31. The purchase of some portion of one company by another; the purchase may be for assets - a definable segment of another entity - orthe purchase of an entire company.






32. A regression assumption violation that occurs when two or more independent vari-ables (or combinations of independent variables) are highly but not perfectly correlated with each other.






33. 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.






34. Rules for portfolio selection that focus on the risk that portfolio value will fall below some minimum acceptable level over some time horizon.






35. Debt and equity secu-rities not classified as either held-to-maturity or held-for-trading securities. The investor is willing to sell but not actively planning to sell. In general - available-for-sale securities are reported at fair value on the bala






36. Aka Liquidity discount.






37. A solvency ratio calculated as total debt divided by total assets.






38. A strategy used to replicate an index. It is also used to take a given amount of cash and turn it into an equity position while maintaining the liquidity provided by the cash.






39. The autocorrelation of the error term.






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






41. The estimated gross amount of money that could be realized from the liquidation sale of an asset or assets - given a rea-sonable amount of time to find a purchaser or purchasers.






42. A strategic corporate goal repre-senting the long-term proportion of earnings that the company intends to distribute to shareholders as dividends.






43. Aka also enterprise risk management.






44. A set of observations on a variable's out-comes in different time periods.






45. The sum of the observations divided by the number of observations.






46. The preference some investors have for shares that exhibit certain characteristics.






47. The rate of return that must be met fora project to be accepted.






48. Time thought of as advancing in extremely small increments.






49. A measurement scale that sorts data into categories that are ordered (ranked) with respect to some characteristic.






50. CMT A hypothetical U.S. Treasury note with a constant maturity. A CMT exists for various years in the range of 2 to