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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. Securities held by a company with the intent to trade them.

2. The sum of market value of common equity - book value of preferred equity - and face value of debt.

3. A quoted interest rate that does not account for compounding within the year.

4. A quantitative measure that specifies where data are centered.

5. 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.

6. A reduction in proportional ownership inter-est as a result of the issuance of new shares.

7. Describes a distribution that is more peaked than a normal distribution.

8. In the con-text of private company valuation - valuation model based on an assumption of a constant growth rate of free cash flow to the firm or a con-stant growth rate of free cash flow to equity.

9. An arrangement whereby a customer authorizes a debit to a demand account; typically used by companies to collect routine pay-ments for services.

10. In accounting contexts - cash on hand (e.g. - petty cash and cash not yet deposited to the bank) and demand deposits held in banks and similar accounts that can be used in payment of obligations.

11. The percentage of total earnings paid out in dividends in any given year (in per-share terms - DPS/ EPS).

12. The price at which an asset or liability would change hands between a willing buyer and a willing seller whe n the former is not under any compulsion to buy and the latter is not under any compulsion to sell; the price that would be received to sell

13. A linear regression model with two or more independent variables.

14. The calculation of returns in a logical and consistent manner.

15. In the context of the Treynor-Black model - the portfolio formed by mixing analyzed stocks of perceived nonzero alpha values. This portfolio is ultimately mixed with the passive mar-ket index portfolio.

16. Promises by the company to pay benefits in the future - other than pension benefits - such as life insurance premiums and all or part of health care insurance for its retirees.

17. The difference between reported net income on an accrual basis and the cash flows from operating and investing activities.

18. The risk associated with accounting standards that vary from country to country or with any uncertainty about how certain transac-tions should be recorded.

19. The study of how data can besummarized effectively.

20. Investing on the basis of dif-ferential expectations.

21. A pre-offer takeover defense mecha-nism that gives target company bondholders the right to sell their bonds back to the target at a pre-specified redemption price - typically at or above par value; this defense increases the need for cash and raises

22. A record of receipts from exports of goods and services - payments for imp
23. Earnings adjusted for nonrecur-ring - non-economic - or other unusual items to elim-inate anomalies andlor facilitate comparisons.

24. The process of allocating the cost of intangible long-term assets having a finite useful life to accounting periods; the allocation of the amount of a bond premium or discount to the periods remaining until bond maturity.

25. Asset allocation in which the invest-ment in the market is increased if one forecasts that the market will outperform T-bills.

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