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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. A yield on a basis comparable to the quoted yield on an interest-bearing money market instrument that pays interest on a 360-<iay basis; the annualized holding period yield - assuming a 360-<iay year.






2. A tabular display of data summarized into a relatively small number of intervals.






3. 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






4. Costs that remain at the same level regardless of a company's level of production and sales.






5. A swap in which the floating payments have a lower limit.






6. A model of stock valuation that views intrinsic value of stock as the sum of book value per share plus the present value of the stock's expected future residual income per share.






7. The proportional annual benefit that results from making an investment.






8. Instruments that payinterest as the difference between the amountborrowed and the amount paid back.






9. The investigation of issues relating to the accuracy of reported accounting results as reflections of economic per-formance; quality of earnings analysis is broadly understood to include not only earnings manage-ment - but also balance sheet manageme






10. The cost of borrowing expressed as a yearly rate.






11. A method of estimating VAR that uses data from the returns of the portfolio over a recent past period and compiles this data in the form of a histogram.






12. Independent projects are projects whose cash flows are independent ofeach other.






13. Assets lacking physical substance - such as patents and trademarks.






14. Analysis that shows the changes in key financial quantities that result from given (economic) events - such as the loss of customers - the loss of a supply source - or a catastrophic event; a risk management technique involving examina-tion of the pe






15. The buyer of a derivative contract. Also refers to the position of owning a derivative.






16. A swaption that allows the holder to enter into a swap as the fixed-rate receiver and floating-rate payer.






17. Under IFRS - the liability of a defined benefit pension.






18. An offset to revenue reflecting any cash refunds - credits on account - and discounts from sales prices given to cus-tomers who purchased defective or unsatisfactory items.






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






20. A form of restructuring in which sharehold-ers of the parent company are given shares in a /Jewl y c eated entity in e~change for their shares of the pare ~ company.






21. A merger involving companies inthe same line of business - usually as competitors.






22. The risk associated with interest rates - exchange rates - and equity prices.






23. The amount of book value (also called carrying value) of common equity per share of common stock - calculated by dividing the book value of shareholders' equity by the num-ber of shares of common stock outstanding.






24. The risk that a company will suffer an extended diminution in market value relative to other companies in the same industry due to a demonstrated lack of concern for environmental - social - and governance risk factors.






25. An operating segment or one level below an operating segment (referred to as a component) .






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






27. The estimated fair value of the price multiple - usually based on fore-casted fundamentals or comparables.






28. The risk of loss from failures in a company's systems and proce-dures (for example - due to computer failures or human failures) or events completely outside of the control of organizations (which would include 'acts of God' and terrorist actions) .






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






30. Resolving differences in indications of value when estimating market value.






31. 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.






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






33. A capital rationing environment assumes that the company has a fixed amount of funds to invest.






34. A reduction or discount to value for shares that are not publicly traded.






35. Analysts who work at brokerages.






36. The average squared deviation below the mean.






37. A theory of regulatory behavior that holds that regulators must take account of the demands of three groups: legislators - who established and oversee the regulatory agency; firms in the regulated industry; and consumers of the regulated indus-try's






38. The granting of stock options to employees as a form of compensation.






39. A bank commitment to extend credit up to a pre-specified amount; the commitment is considered a short-term liability and is usually in effect for 364 days (one day short of a full year).






40. Large industry groupings.






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






42. A statistical model used to clas-sifY borrowers according to creditworthiness.






43. 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.






44. Method of accounting in which the effect of transactions on financial condition and income are recorded when they occur - not when they are settled in cash.






45. A synonym for robust standard errors.






46. A swap in which the notional principal changes according to a for-mula related to changes in the underlying.






47. A public document that provides the material facts concerning matters on which shareholders will vote.






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






49. A multifactor model In which statistical methods are applied to a set of historical returns to determine portfolios that best explain either historical return covariances or vanances.






50. The difference between the market price of the option and its intrinsic value - determined by the uncertainty of the underlying over the remaining life of the option.







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