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CFA Investment Foundation Program Terms
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The CFA Institute Investment Foundations Program covers the essentials of finance, ethics, and investment roles, providing a clear understanding of the global investment industry.

CFA Investment Foundation Program Terms
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25 Questions

1. The percentage change in real output (real GDP) for an economy.

2. Economy-wide fluctuations in economic activity.

3. Liabilities related to expenses that have been incurred but not yet paid as of the end of an accounting period.

4. A situation in which a currency is getting stronger relative to other currencies.

5. A profitability ratio that indicates how much (percentage) of each monetary unit of revenue is left after all costs and expenses are covered.

6. Private investment pools that investment managers organise and manage. They are characterised by their availability to only a limited number of investors, agreements that lock up the investors’ capital for fixed periods, and performance-based managerial compensation.

7. A financial statement that identifies the profit or loss of a company during a given time period, such as one year.

8. A formal contract that represents a loan from an investor (bondholder) to an issuer. The contract describes the key terms of the debt obligation, such as the interest rate and the maturity.

9. Turning points that signal changes in the economy in the future, and thus are considered useful for economic prediction and policy formulation.

10. Managers who actively buy and sell assets and/or alter asset allocations and seek to earn excess risk-adjusted returns.

11. Purchase of securities of companies, trusts, and partnerships that make direct investments, such as shares in mutual funds and exchange-traded funds, limited partnership interests in hedge funds, asset-backed securities, and interests in pension funds, foundation funds, and endowment funds.

12. Difference between the revenue generated from selling products and services and the explicit costs of producing them.

13. A process in which criminals use financial services to transfer money from illegal operations to other legal activities; the money becomes “clean” in the process.

14. Private equity investment strategy that involves buying or selling existing private equity investments.

15. Tendency of people to be less careful about avoiding losses once they have purchased insurance, potentially leading to losses occurring more often when they are insured than when they are not.

16. Creation of new financial products by buying and repackaging securities or other assets; the creation and issuance of new debt securities that are backed by a pool of other debt securities.

17. The first issuance of common shares to the public by a formerly private corporation.

18. The process of measuring the performance of investments, including the calculation of reward-to-risk ratios.

19. The long-term mix of assets that is expected to achieve the client’s long-term objectives, given the client’s investment constraints.

20. Derivatives in which two parties swap cash flows or other financial instruments over multiple periods (months or years) for mutual benefit, usually to manage risk.

21. Markets in which investors trade with dealers at the prices quoted by these dealers. Also called dealer markets, price-driven markets, or over-the-counter markets.

22. Orders that are only seen by the brokers or trading venues that receive them and cannot be seen by other traders until the orders can be filled.

23. The act of placing an order ahead of a customer’s order to take advantage of the price impact that the customer’s order will have.

24. Money provided to individuals, companies, and governments to finance their needs.

25. Situations in which values, interests, and/or rules potentially conflict.