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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. Momentum indicators based on price.






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






3. The market value of debt and equity.






4. Debt or equity financial assets bought with the inten-tion to sell them in the near term - usually less than three months; securities that a company intends to trade.






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






6. An option in which the underlying is a stock index.






7. A synonym for robust standard errors.






8. A company that has similar business risk; usually in the same industry and preferably with a single line of business.






9. Earnings adjusted for nonrecur-ring - non-economic - or other unusual items to elim-inate anomalies andlor facilitate comparisons.






10. A strategy in which a position is hedged by making frequent adjustments to the quantity of the instrument used for hedging in relation to the instrument being hedged.






11. A profitability ratio calcu-lated as net income divided by average sharehold-ers' equity.






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






13. 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.






14. A weighted average of the after-tax required rates of return on a company's common stock - preferred stock - and long-term debt - where the weights are the fraction of each source of financing in the company's target capital structure.






15. The minimum rate of return required by an investor to invest in an asset - given the asset's riskiness.






16. The procedure of drawing a sample to satisfy the definition of a simple ran-dom sample.






17. In the context of the Treynor-Black model - the portfolio formed by mixing analyzed stocks of perceived nonzero alpha values. This portfolio is ultimately mixed with the passive mar-ket index portfolio.






18. An indicator of profitability - calculated as net income divided by revenue; indicates how much of each dollar of revenues is left after all costs and expenses.






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






20. Future benefits promised to the employee regardless of continuing service. Bene-fits typically vest after a specified period of service or a specified period of service combined with age.






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






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






23. A situation in a futures market where the current futures price is greater than the current spot price for the underlying asset.






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






25. The number of shares that would beoutstanding if all potentially dilutive claims oncommon shares (e.g. - convertible debt - convert-ible preferred stock - and employee stock options)were exercised.






26. Also called present value of a basis point or price value of a basis point (PVBP) - the change in the bond price for a I basis point change in yield.






27. A poison pill takeover defense that gives target company shareholders the right to purchase shares of the acquirer at a significant discount to the market price - which has the effect of causing dilution to all existing acquiring com-pany shareholder






28. The cash flow that is real-ized because of a decision; the changes or incre-ments to cash flows resulting from a decision or action.






29. The amount of money a buyer pays and seller receives to engage in an option transaction.






30. 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.






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






32. Factors that affect the average returns of a large number of different assets.






33. Dummy variables used as dependent variables rather than as inde-pendent variables.






34. An equation describing the expected return on any asset (or portfolio) as a linear function of its beta relative to the market portfolio.






35. A procedure of selecting every kth member until reaching a sample of the desired size. The sample that results from this procedure should be approximately random.






36. The single-period interest rate for a completely risk-free security if no infla-tion were expected.






37. An association or relationship between variables that cannot be graphed as a straight line.






38. Investigation and analysis in support of a recommendation; the failure to exercise due diligence may sometimes result in liability accord-ing to various securities laws.






39. A means of settling payments in which the amount owed by the first party to the second is netted with the amount owed by the sec-ond party to the first; only the net difference is paid.






40. A form of restructuring that involves the creation of a new legal entity and the sale of equity in it to outsiders.






41. The ratio ofthe percentage change in operating income to the percentage change in units sold; the sensitivity of operating income to changes in units sold.






42. Estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.






43. A liquidity ratio that esti-mates the number of days that an entity could meet cash needs from liquid assets; calculated as (cash + short-term marketable investments + receivables) divided by daily cash expenditures.






44. A quantity computed from or used to describe a sample of data.






45. A swap in which one party agrees to pay the total return on a security. Often used as a credit derivative - in which the underlying is a bond.






46. R The correlation between the actual and forecasted values of the dependent variable in a regression.






47. To defer the decision to invest in a future projecn until the outcome of some or all of a current project is known. -Projects are sequenced through time - so that investing iN a project creates the option to invest in future projects.






48. A merger or acquisition that is to be paid for with cash; the cash for the merger might come from the acquiring company's existing assets or from a debt issue.






49. Any outcome or specified set of outcomes of a random variable.






50. Said of a sale in which proceeds are to be paid in installments over an extended period of time.