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. The residuals from a fitted time-series model within the sample period used to fit the model.

2. Research and development costs relating to projects that are not yet completed - such as have been incurred by a company that is being acquired.

3. A measure of correlation applied to ranked data.

4. The differ-ence between reported net income on an accrual basis and the cash flows from operating and investing activities compared to the average net operating assets over the period.

5. A liquidity ratio that esti-mates the number of days that an entity could meet cash needs from liquid assets; calculated as (cash + short-term marketable investments + receivables) divided by daily cash expenditures.

6. With reference to a sample - the mean of the absolute values of deviations from the sample mean.

7. An inventory accounting method that averages the total cost of available inventory items over the total units avail-able for sale.

8. The potential for asymmetric information to bring about a general decline in product quality in an industry.

9. A result indicating that the null hypothesis can be rejected; with reference to an estimated regression coefficient - frequently understood to mean a result indicating that the corresponding population regression coefficient is different from O.

10. A number between - 1 and + 1 that measures the co-movement (linear association) between two random variables.

11. Activities which are associated with the acquisition and disposal of property - plant - and equipment; intangible assets; other long-term assets; and both long-term and short-term investments in the equity and debt (bonds and loans) issued by other c

12. The price for immediate purchase of the underlying asset.

13. Total company valme (the market value of debt - common equity - and preferred equity) minus the value of cash and investments.

14. To reduce the value of a future payment in allowance for how far away it is in time; to calcu-late the present value of some future amount. Also - the amount by which an instrument is priced below its face value.

15. Ratios that measure how efficiently a company performs day-to-day tasks - such as the collection of receivables and management of inventory.

16. American Free Trade Agreement An agree-ment - which became effective on January 1 - 1994 - to eliminate all barriers to international trade between the United States - Canada - and Mexico after a 15-year phasing-in period.

17. A long-term pattern of movement in a partic-ular direction.

18. Valuation measures and other factors related to share price or the trading characteristics of the shares - such as earn-ings yield - dividend yield - and book-to-market value.

19. The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or groups of assets.

20. The relationship amongputs - calls - and forward contracts.

21. Futures contracts in which the underlying is a stock - bond - or currency.

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

23. A variation of a floating-rate note that has some type of unusual characteristic such as a leverage factor or in which the rate moves opposite to interest rates.

24. Segment profit (loss) divided by segment revenue.

25. The uncertainty associated with tax laws.

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