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CFA Level 1: Vocab Exam Questions and Answers 2024( A+ GRADED 100% VERIFIED).
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CFA Level 1: Vocab Exam Questions and Answers 2024( A+ GRADED 100% VERIFIED).
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CFA Level 1: VocabA priori probability - ANS A probability based on logical analysis rather than on observation or
personal judgment.
Abnormal return - ANS The amount by which a security's actual return differs from its expected
return, given the security's risk and the market's return.
Absolute advantage - ANS A country's ability to produce a good or service at a lower absolute
cost than its trading partner.
Absolute dispersion - ANS The amount of variability present without comparison to any
reference point or benchmark.
Absolute frequency - ANS The number of observations in a given interval (for grouped data).
Accelerated book build - ANS An offering of securities by an investment bank acting as
principal that is accomplished in only one or two days.
Accelerated methods - ANS Depreciation methods that allocate a relatively large proportion of
the cost of an asset to the early years of the asset's useful life.
Accounting costs - ANS Monetary value of economic resources used in performing an activity.
These can be explicit, out-of-pocket, current payments, or an allocation of historical payments
(depreciation) for resources. They do not include implicit opportunity costs.
Accounting profit - ANS income before taxes or pre tax income.
Accounts receivable turnover - ANS Ratio of sales on credit to the average balance in accounts
receivable.
Accrued expenses - ANS accrued liabilities; Liabilities related to expenses that have been
incurred but not yet paid as of the end of an accounting period
Acid-test ratio - ANS A stringent measure of liquidity that indicates a company's ability to satisfy
current liabilities with its most liquid assets, calculated as (cash + short-term marketable
investments + receivables) divided by current liabilities.
, Accumulated depreciation - ANS An offset to property, plant, and equipment (PPE) reflecting
the amount of the cost of PPE that has been allocated to current and previous accounting
periods.
Acquisition method - ANS 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 of a joint project of the IASB and FASB aiming at convergence in standards for
the accounting of business combinations.
Action lag - ANS Delay from policy decisions to implementation.
Active investment - ANS An approach to investing in which the investor seeks to outperform a
given benchmark.
Active return - ANS The return on a portfolio minus the return on the portfolio's benchmark.
Active strategy - ANS In reference to short-term cash management, an investment strategy
characterized by monitoring and attempting to capitalize on market conditions to optimize the
risk and return relationship of short-term investments.
Activity ratio - ANS The ratio of the labor force to total population of working age. Also called
participation ratio.
Activity ratios - ANS Ratios that measure how efficiently a company performs day-to-day tasks,
such as the collection of receivables and management of inventory. Also called asset utilization
ratios or operating efficiency ratios
Add-on rates - ANS Bank certificates of deposit, repos, and indices such as Libor and Euribor
are quoted on an add-on rate basis (bond equivalent yield basis).
Addition rule for probabilities - ANS A principle stating that the probability that A or B occurs
(both occur) equals the probability that A occurs, plus the probability that B occurs, minus the
probability that both A and B occur.
Agency RMBS - ANS In the United States, securities backed by residential mortgage loans and
guaranteed by a federal agency or guaranteed by either of the two GSEs (Fannie Mae and
Freddie Mac).
Aggregate demand - ANS The quantity of goods and services that households, businesses,
government, and foreign customers want to buy at any given level of prices.
Aggregate demand curve - ANS Inverse relationship between the price level and real output.
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