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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 P/E to-growth ratio - calculated as the stock's PI E divided by the expected earnings growth rate.






2. A financial state-ment that reconciles beginning-of-period ana end-of-period balance sheet values of retained income; shows the linkage between the balance sheet and income statement.






3. A principle stating that the pr:obability that A or B occurs (both occur) equals he probabili ty thab A occ rs - plus the probabir ty tha~ B occurs - minus the probabil-ity that both A and B occur.






4. The loss in the value of an option resulting from movement of the option price toward its payoff value as the expiration day approaches.






5. In the context of inventory management - the need for inventory as part of the routine production-sales cycle.






6. A market index portfolio.






7. Research and development costs relating to projects that are not yet completed - such as have been incurred by a company that is being acquired.






8. The positive square root of the variance; a measure of dispersion in the same units as the original data.






9. A floating-rate note or bond in which the coupon is adjusted to move opposite to a benchmark interest rate.






10. Approach to translating for-eign currency financial statements for consolida-tion in which all assets and liabilities are translated at the current exchange rate. The cur-rent rate method is the prevalent method of translation.






11. An estimate of the country spread (country equity premium) for a develop-ing nation that is based on a comparison of bonds yields in country being analyzed and a developed country. The sovereign yield spread is the differ-ence between a government bo






12. An unlimited funds environment assumes that the company can raise the funds it wants for all profitable projects simply by paying the required rate of return.






13. A depreciation method tHat allocates the cost of a long-lived asset based on-actual usage during the period .






14. The amount at which an asset or liability is valued according to account-ing principles.






15. A liability account for money that has been collected for goods or services that have not yet been delivered; payment received in advance of providing a good or servIce.






16. When a company has a single risk management group that monitors and controls all of the risk-taking activities of the organization.






17. With respect to the format of a bal-ance sheet - a format in which assets - liabilities - and equity are listed in a single column.






18. Heightened uncertainty regarding a company's ability to meet its various obligations because of lower or negative earnings.






19. 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.






20. The first in - first out - method of accounting for inventory - which matches sales against the costs of items of inventory in the order in which they were placed in inventory.






21. The process of accumulating interest on interest.






22. The incor-poration of production planning into inventory management. A MRP analysis provides both a materials acquisition schedule and a production schedule.






23. With reference to an interval of grouped data - the number of observations in the interval divided by the total number of observa-tions in the sample.






24. A feature of futures markets in which futures prices provide valuable information about the price of the underlying asset.






25. An activity ratio equal to the number of days in the period divided by inventory turnover over the period.






26. (Aka forward rate agreement)






27. The condition in which supply equals demand.






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






29. The compound rate of growth of one unit of currency invested in a port-folio during a stated measurement period; a mea-sure of investment performance that is not sensitive to the timing and amount of withdrawals or additions to the portfolio.






30. A company's profits on its usual business activities before deducting taxes.






31. Real CDP divided by the population.






32. A solvency ratio measuring the number of times interest and lease payments are covered by operating income - calculated as (EBIT + lease payments) divided by (interest payments + lease payments).






33. The estimation of an unknown value on the basis of two known values that bracket it - using a straight line between the two known values.






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






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






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






37. A method of account-ing in which combined companies were portrayed as if they had always operated as a single eco-nomic entity. Called pooling of interests under






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






39. Businesses with high sensitivity to business- or industry-cycle influences.






40. Momentum indicators based on price.






41. The actual cash that would be avail-able to the company's investors after making all investments necessary to maintain the company as an ongoing en terprise (also referred to as free cash flow to the firm); the internally generated funds that can be






42. Amount that must be set aside each period to have $1 at some future point in time.






43. With reference to assets - the amount of cash or cash equivalents that would have to be paid to buy the same or an equivalent asset today; with reference to liabilities - the un discounted amount of cash or cash equivalents that would be required to






44. Selling a product in slightly altered forms to different groups of consumers.






45. A random variable for which the range of possible outcomes is the real line (all real numbers between (-00 and +(0) or some subset of the real line.






46. A transaction in which a position in the underlying is protected by buying a put and selling a call with the premium from the sale of the call offsetting the premium from the purchase of the put. It can also be used to protect a floating-rate borrowe






47. With reference to equity investors - investors whose investment disciplines cannot be clearly categorized as value or growth.






48. 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.






49. The interest earned each period on the original investment; interest calculated on the principal only.






50. The expected return in excess of the risk-free rate for a portfolio with a sensitivity of 1 to one factor and a sensitivity of 0 to all other factors.