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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. Nonconvertible - noncallable preferred stock with a specified divi-dend rate that has a claim on earnings senior to the claim of common stock - and no maturity date.






2. A transformation that subtracts the value of the time series in period t - 1 from its value in period t.






3. The cost associated with holding someasset - including financing - storage - and insurancecosts. Any yield received on the asset is treated as anegative carrying cost.






4. 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.






5. The amount to which a payment or series of payments will grow by a stated future date.






6. A merger in which one company ceases to exist as an identifiable entity and all its assets and liabilities become part of a purchasing company.






7. Division ofnet operating income by an overall capitalization rate to arrive at market value.






8. An option in which the holder has the right to make an unknown interest payment and receive a known interest payment.






9. 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.






10. The slope coefficients in a multiple regression.






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






12. A portfolio having factor sensitiv-ities that are matched to those of a benchmark or other portfolio.






13. The competitive strategy of being the lowest cost producer while offering products comparable to those of other firms - so that prod-ucts can be priced at or near the industry average.






14. The present discounted value of future cash flows: For assets - the present dis-counted value of the future net cash inflows that the asset is expected to generate; for liabilities - the present discounted value of the future net cash outflows that a






15. The date on which the parties to a swap make payments.






16. A criterion asserting that the optimal portfolio is the one that minimizes the probability that portfolio return falls below a threshold level.

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






18. A measurement scale that has all the characteristics of interval measurement scales as well as a true zero point as the origin.






19. Costs of inven tories including costs of purchase - costs of conversion - other costs to bring the inventories to their present location and condition - and the allocated portion of) fixed production overhead costs.






20. PIE (or forward PIE or prospective PIE) A stock's current price divided by the next year's expected earnings.






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






22. A valuation ratio calculated as price per share divided by book value per share.






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






24. A policy regime is one that selects a target path for the exchange rate with interven-tion in the foreign exchange market to achieve that path.






25. A form ofcommon-size analysis in which the accounts in agiven period are used as the benchmark or baseperiod - and every account is restated in subse-quent periods as a percentage of the base period'ssame account.






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






27. 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.






28. The quantity of real CDP pro-duced by an hour of labor.






29. Said of a por tfolio for which eco-nomic sectors are represented in the same pro-portions as in the benchmark - using market-value weights.






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






31. Probabilities that generally do not vary from person to person; includes a pri-ori and objective probabilities.






32. A time series that is not covariance station-ary is said to have a unit root.






33. The price multiple for a stock assumed to hold at a stated future time.






34. With reference to the error term of a regression - having a variance that differs across observations.






35. A prof -itabili ty ratio calculated as operating income (i.e. - income before inte est and taxes) divided by revenue.






36. To sell the assets of a company - division - or subsidiary piecemeal - typically because of bank-ruptcy; the form of bankruptcy that allows for the orderly satisfaction of creditors' claims after which the company ceases to exist.






37. A process used in a deliverable forward contract in which the long pays the agreed-upon price to the short - which in turn delivers the underlying asset to the long.






38. 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.






39. Factors related to the company's internal performance - such as factors relating to earnings growth - earnings variability - earnings momentum - and financial leverage.






40. The sum of market value of common equity - book value of preferred equity - and face value of debt.






41. The difference between current assets and current liabilities.






42. The strongest form of short-term bank borrowing facilities; they are in effect for multiple years (e.g. - 3-5 years) and may have optional medium-term loan features.






43. Earnings per share divided by price; the reciprocal of the PIE ratio.






44. The amount of dispersion rela-tive to a reference value or benchmark.






45. Weights that are used to compute a binomial option price. They are the probabilities that would apply if a risk-neutral investor valued an option.






46. A swap in which each party makes ayments to the other in different currenmes.






47. A solvency ratio calculated as total debt divided by total debt plus total share-holders ' equi ty.






48. An activity ratio equal to the number of days in a period divided by the inventory ratio for the period; an indication of the number of days a company ties up funds in inventory.






49. 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.






50. When a bankrupt company is allowed to enforce contracts that are favorable to it while walking away from contracts that are unfa-vorable to it.