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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. Activities related to obtaining or repaying capital to be used in the business (e.g. - equity and long-term debt).






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






3. 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.






4. The difference between reported earnings per share and expected earnings per share.






5. A guarantee from the clear-inghouse that if one party makes money on a transaction - the clearinghouse ensures it will be paid.






6. Carlo simulation method An approach to estimating a probability distribution of outcomes to examine what might happen if particular risks are faced. This method is widely used in the sci-ences as well as in business to study a variety of problems.






7. A diagram with branches emanating from nodes representing either mutually exclu-sive chance events or mutually exclusive decisions.






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






9. A forward contract in which the underlying is a bond.






10. The last in - first out - method of accounting for inventory - which matches sales against the costs of items of inventory in the reverse order the items were placed in inventory (i.e. - inventory produced or acquired last are assumed to be sold firs






11. A swap transaction in which at least one cash flow is tied to the return to an equity portfo-lio position - often an equity index.






12. With reference to a random vari-able - the property of having characteristics such as mean and variance that are not constant through time.






13. The risk that portfolio value will fall below some minimum acceptable level over some time horizon.






14. A test of a strategy or model using a sample outside the time period on which the strategy or model was developed.






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






16. A multivariate classification technique used to discriminate between groups - such as companies that either will or will not become bankrupt during some time frame.






17. The use of fixed costs in operations.






18. The prooability of an observation - given a par ticular set of conditions.






19. The probability of correctly rejecting the null-that is - rejecting the null hypothesis when it is false.






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






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






22. An inter-national agreement signed in 1947 to reduce tar-iffs on international trade.






23. Segment revenue divided by seg-ment assets .






24. A reduction in the value of an asset as stated in the balance sheet.






25. The expected value of a stated event given that another event has occurred.






26. A basis for reporting investment income in which the investing entity recognizes a share of income as earned rather than as divi-dends when received. These transactions are typi-cally reflected in Investments in Associates or Equity Method Investment






27. An activity ratio equal to the number of days in period divided by receivables turnover.






28. Agency costs that are incurred despite adequate monitoring and bonding of management.






29. Covering or containing all possible outcomes.






30. A method of accounting for abusiness combination where the acquiring com-pany allocates the purchase price to each assetacquired and liability assumed at fair value. If thepurchase price exceeds the allocation - the excessis recorded as goodwill.






31. A form of centralized risk management that typically encompasses the man-agement of a broad variety of risks - ind uding insuran -ce risk.






32. 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.






33. An option strategy that combines two bull or bear spreads and has three exercise prices.






34. 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.






35. Mutually exclusive proj-ects compete directly with each other. For example - if Projects A and B are mutually exclusive - you can choose A or B - but you cannot choose both. n Factorial For a positive integer n - the product of the first n positive i






36. The periodic investment of a fixed amount of money.






37. A country that is lending more to the rest of the world than it is borrowing from it.






38. The sum of all values in a distribution or dataset - divided by the number of values summed; a synonym of arithmetic mean.






39. A method of revenue recognition in which - in each accounting period - the company estimates what percentage of the contract is complete and then reports that per-centage of the total contract revenue in its income statement.






40. Long-term assets with physical sub-stance that are used in company operations - such as land (property) - plant - and equipment.






41. A calculation of yield that is annualized using the ratio of 365 to the number of days to maturity. Bond equivalent yield allows for the restatement and comparison of securities with different compounding periods.






42. An annuity with a first cash flow that is paid one period from the present.






43. An increment or premium to value associated with a controlling ownership interest in a company.






44. The error of rejecting a true null hypothesis.






45. A money measure of the goods and services produced within a country's borders over a stated time period.






46. An option strategy that combines a bull spread and a bear spread having two differentexercise prices - which produces a risk-free payoffof the difference in the exercise prices.






47. The amount of income earned during a period per share of common stock.






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. Costs that fluctuate with the level of production and sales.






50. 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