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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 slope of the capital market line - indicating the market risk premium for each unit of market risk.






2. A combination of interest rate put options designed to hedge a lender against lower rates on a floating-rate loan.






3. Essentially - the pur-chase of some asset by the buyer (lessee) that is directly financed by the seller (lessor).






4. An amount or percentage deducted from the value of an owner-ship interest to reflect the relative absence ofmarketability.






5. The sum of the sample observations - divided by the sampfe size.






6. A ratio derived from the market; sales price divided by annual gross income equals CIM.






7. American Free Trade Agreement An agree-ment - which became effective on January 1 - 1994 - to eliminate all barriers to international trade between the United States - Canada - and Mexico after a 15-year phasing-in period.






8. Probabilities reflecting beliefs prior to the arrival of new information.






9. Investing on the basis of dif-ferential expectations.






10. Real CDP divided by the population.






11. Cash and investments (specifi-cally cash - cash equivalents - and short-term investments) .






12. Residual income after the forecast horizon.






13. The expected excess return on the market over the risk-free rate.






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






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






16. The party obtaining the use of an asset through a lease.






17. Assets that are expected to be consumed or converted into cash in the near future - typically one year or less.






18. A financial instrument that gives one party the right - but not the obligation - to buy or sell an underlying asset from or to another party at a fixed price over a specific period of time. Also referred to as contingent claims.






19. The relationship between the price of the underlying and an option's exercise price.






20. 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.






21. A method of accounting for a business combination where the acquirer is required to measure each identifiable asset and liability at fair value. This method was the result ofa joint project of the IASB and FASB aiming at convergence in standards for






22. In using the method of com parables - the value of a price mul-tiple for the comparison asset; when we have com-parison assets (a group) - the mean or median value of the multiple for the group of assets.






23. A post-offer takeover defense mechanism that involves the assumption of a large amount of debt that is then used to finance share repurchases; the effect is to dramat-ically change the company's capital structure while attempting to deliver a value t






24. A common or underlying element with which several variables are correlated.






25. A trade in two closely related stocks involving the short sale of one and the pur-chase of the other.






26. The evaluation of risk-adjusted performance; the evaluation of invest-ment skill.






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






28. Additional margin that must be deposited in an amount sufficient to bring the balance up to the initial margin requirement.






29. The average squared deviation below a target value.






30. 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






31. The ability to make additional investments in a project at some future time if the financial results are strong.






32. A forecasting approach that involves moving from international and national macroeconomic forecasts to industry forecasts and then to individual company and asset forecasts.






33. When a company is acquired and the purchase price is less than the fai r value of the net assets. The current treatment of the excess of fair value over the purchase price is diffe re t under IFRS and U.S. CAAP. The excess is never accounted for as n






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






35. 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.






36. A quantitative measure that describes the location or distribution of data; includes not only measures of central tendency but also other measures such as percentiles.






37. A type of non-audited financial statements; typically provide an opinion letter with representations and assurances by the reviewing accountant that are less than those in audited financial statements.






38. A financial statement that reconciles beginning-of-period and end-of-period balance sheet values of cash; provides information about an entity's cash inflows and cash outflows as they pertain to oper-ating - investing - and financing activities.






39. A swap in which the floating payments have an upper limit.






40. The accounting principle that expenses should be recognized when the associ-ated revenue is recognized.






41. The risk associated with operating earnings. Operating earnings are uncertain because total revenues and many of the expendi-tures contributed to produce those revenues are uncertain.






42. A varia-tion ofVAR that reflects credit risk.






43. 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.






44. Assets that can be most readily con-verted to cash (e.g. - cash - short-term marketable investments - receivables) .






45. The property of having a non-constant variance; refers to an error term with the property that its variance differs across observations.






46. A measurement scale that categorizes data but does not rank them.






47. Method used under IFRS to estimate the defined benefit obligation; for each period in which employees provide services - they earn a portion of the post-employment bene-fits that the company has promised to pay.






48. All changes in equity other than contributions by - and distributions to - own-ers; income under clean surplus accounting; includes all changes in equity during a period except those resulting from investments by own-ers and distributions to owners;






49. A test that is not concerned with a parameter - or that makes minimal assumptions about the population from which a sam Ie comes.






50. The residuals from a fitted time-series model within the sample period used to fit the model.