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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 share price at a particular point in the future.






2. 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






3. The fixed price at which an option holder can buy or sell the underlying.






4. An accelerated depre-ciation method - i.e. - one that allocates a relativelylarge proportion of the cost of an asset to the early years of the asset's useful life.






5. An activity ratio equal to rev-enue divided by average receivables.






6. A condition in the futures markets in which a transaction cannot take place because the price would be beyond the limits.






7. 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.






8. The annual return that an investor earns on a bond if the investor purchases the bond today and holds it until maturity.






9. The process of allocating the cost of intangible long-term assets having a finite useful life to accounting periods; the allocation of the amount of a bond premium or discount to the periods remaining until bond maturity.






10. Not symmetrical.






11. An agreement allowing the lessee to use some asset for a period of time; essentially a rental.






12. Describes a distribution with kurtosis identical to that of the normal distribution.






13. European option An option contract that can only be exercised on its expiration date.






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. A third party that is sough t out bX the tar-get c0mpany's board to Burchase a substantial minority stake in the target-enough to block a hostile takeover without selling the entire company.






16. The costs of holding an asset - generally a function of the physical char-acteristics of the underlying asset.






17. The risk associated with the conversion of foreign financial statements into domestic currency.






18. With respect to financial statement analy-sis - the ability of a company to fulfill its long-term obligations.






19. Analysts who work at brokerages.






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






21. The value to a specific buyer - tak-ing account of potential synergies based on the investor's requirements and expectations.






22. A transaction between two affiliates - an investor company and an associate company such that the associate company records a profit on its income statement. An example is a sale of inven-tory by the associate to the investor company.






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






24. An extra return that compen-sates investors for the risk of loss relative to an investment's fair value if the investment needs to be converted to cash quickly.






25. A hypothesis concern-ing pricing behavior that holds that even though there are only a few firms in an industry - they are forced to price their products more or less com-petitively because of the ease of entry by outsiders. The key aspect of a conte






26. An ordered listing.






27. With reference to regression - the set of variables included in the regression and the regression equation's functional form.






28. The portion of the dependent variable that is not explained by the independent vari-able(s) in the regression.






29. Huidity When receipts lag - creating pres-sure fmm the decreased available funds.






30. An option in which the underlying is a bond; primarily traded in over-the-counter markets.






31. Any test (or procedure) concerned with parameters or whose validity depends on assumptions concerning the population generat-ing the sample.






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






33. An international organi-zation that places greater obligations on its mem-ber countries to observe the GATT rules.






34. 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






35. Approach to trans-lating foreign currency financial statements for consolidation in which monetary assets and liabil-ities are translated at the current exchange rate. Nonmonetary assets and liabilities are translated at historical exchange rates (th






36. A decision rule for choos-ing between two investments based on their means and variances.






37. Arrangements that do not result in additional liabilities on the balance sheet but nonetheless create economic obligations.






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






39. As used in this book - the use of a spreadsheet in executing a dividend discount model valuation - or other present value model valuation.






40. The intercept and slope coefficient(s) of a regression.






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






42. A method for estimating a company's before-tax cost of debt based upon the yield on comparably rated bonds for maturities that closely match that of the company's existing debt.






43. The statistical measure that indicates the peakedness of a distribution.






44. With reference to investmentselection processes - an approach that involves selection from all securities within a specified investment universe - i.e. - without prior narrowiNg of the universe on the bas' s of macroeconomj c or overall market consid






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






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






47. The price paid to buy an asset.






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






49. A European-style option with a value at maturity equal to the difference between the stock price at maturity and the average stock price during the life of the option - or $0 - whichever is greater.






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