CFA Level 2 Glossary
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The CFA Level II exam consists of 22 item sets comprised of vignettes with 88 accompanying multiple-choice questions.
Duration: The CFA Level II exam will be 4 hours and 24 minutes, split into two equal sessions of 2 hours and 12 minutes, with an optional break in-between.

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CFA Level 2 Topics & Weightage in 2022:
Ethics 10-15%​
Quantitative Methods 5-10%
Economics 5-10%
Financial Reporting & Analysis 10-15%
Corporate Finance 5-10%
Equity 10-15%
Fixed Income 10-15%
Derivatives 5-10%
Alternative Investments 5-10%
Portfolio Management 10-15%

CFA Level 2 Glossary
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25 Questions

1. Agreements between the company as borrower and its creditors.

2. An extra return that compen-sates investors for expected inflation.

3. A type of qualitative variable that takes on a value of 1 if a particular condition is true and 0 if that condition is false.

4. A perpetual annuity - or a set of never-ending level sequential cash flows - with the first cash flow occurring one period from now.

5. The positive square root of the sample variance.

6. The tendency of a time series to fall when its level is above its mean and rise when its level is below its mean; a mean-reverting time series tends to re turn to its long-term mean.

7. Income rate that reflects the relationship between equity income and equity capital.

8. Earnings exclud-ing nonrecurring components.

9. The combination of calls - the underly-ing - and risk-free bonds that replicates a put option.

10. With reference to the presenta-tion of expenses in an income statement - the grouping together of expenses by similar nature - e.g. - all depreciation expenses.

11. Asset outflows not directly related to the ordi-nary activities of the business.

12. The uncertainty associated with tax laws.

13. A two-dimensional plot of pairs of obser-vations on two data series.

14. A time series in which the value ofthe series in one period is the value of the series in the previous period plus an unpredictable random error.

15. Net operating income less debt service and less taxes payable on income from operations.

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

17. A random variable hav-ing the outcomes 0 and 1.

18. A floating-rate note or bond in which the coupon is adjusted to move opposite to a benchmark interest rate.

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

20. An act passed by the U.S. Con-gress in 2002 that created the Public Company Accounting Oversight Board (PCAOB) to oversee auditors.

21. The smaller the stake that managers have in the company - the less is their share in bearing the cost of excessive perquisite consumption or not giving their best efforts in running the company.

22. For accounting purposes - the exchange rates that existed when the assets and liabilities were initially recorded.

23. Accounting method in which the only relevant transactions for the financial statements are those that involve cash.

24. The company in a merger or acquisition that is being acquired.

25. A value against which a computed test statistic is compared to decide whether to reject or not reject the null hypothesis.

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