CFA Level 1 Exam 1744 Questions with answers 2023
n Factorial - CORRECT ANSWER For a positive integer n, the product of the first n positive
... [Show More] integers; 0 factorial equals 1 by definition. n factorial is written as n!.
Accounting costs - CORRECT ANSWER 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.
Balance of payments - CORRECT ANSWER A double-entry bookkeeping system that summarizes a country's economic transactions with the rest of the world for a particular period of time, typically a calendar quarter or year.
M2 alpha - CORRECT ANSWER Difference between the risk-adjusted performance of the portfolio and the performance of the benchmark.
M2 - CORRECT ANSWER A measure of what a portfolio would have returned if it had taken on the same total risk as the market index.
Multi-factor model - CORRECT ANSWER A model that explains a variable in terms of the values of a set of factors.
Multilateral trading facilities - CORRECT ANSWER Trading venues that function like exchanges but that do not exercise regulatory authority over their subscribers except with respect to the conduct of the subscribers' trading in their trading systems.
Multi-market indexes - CORRECT ANSWER Comprised of indexes from different countries, designed to represent multiple security markets.
Multinational corporation - CORRECT ANSWER A company operating in more than one country or having subsidiary firms in more than one country.
Multiplication rule for probabilities - CORRECT ANSWER The rule that the joint probability of events A and B equals the probability of A given B times the probability of B.
Multiplier models - CORRECT ANSWER Valuation models based on share price multiples or enterprise value multiples.
Multi-step format - CORRECT ANSWER With respect to the format of the income statement, a format that presents a subtotal for gross profit (revenue minus cost of goods sold).
Multivariate distribution - CORRECT ANSWER A probability distribution that specifies the probabilities for a group of related random variables.
Balance of trade deficit - CORRECT ANSWER When the domestic economy is spending more on foreign goods and services than foreign economies are spending on domestic goods and services.
Multivariate normal distribution - CORRECT ANSWER A probability distribution for a group of random variables that is completely defined by the means and variances of the variables plus all the correlations between pairs of the variables.
Municipal bonds - CORRECT ANSWER A type of non-sovereign bond issued by a state or local government in the United States. It very often (but not always) offers income tax exemptions.
Munis - CORRECT ANSWER A type of non-sovereign bond issued by a state or local government in the United States. It very often (but not always) offers income tax exemptions.
Mutual fund - CORRECT ANSWER A comingled investment pool in which investors in the fund each have a pro-rata claim on the income and value of the fund.
Mutually exclusive projects - CORRECT ANSWER Mutually exclusive projects compete directly with each other. For example, if Projects A and B are mutually exclusive, you can choose A or B, but you cannot choose both.
Narrow money - CORRECT ANSWER The notes and coins in circulation in an economy, plus other very highly liquid deposits.
Nash equilibrium - CORRECT ANSWER When two or more participants in a non-coop-erative game have no incentive to deviate from their respective equilibrium strategies given their opponent's strategies.
National income - CORRECT ANSWER The income received by all factors of production used in the generation of final output. National income equals gross domestic product (or, in some countries, gross national product) minus the capital consumption allowance and a statistical discrepancy.
Natural language processing - CORRECT ANSWER Computer programs developed to analyze and interpret human language.
Natural rate of unemployment - CORRECT ANSWER Effective unemployment rate, below which pressure emerges in labor markets.
Balance sheet - CORRECT ANSWER The financial statement that presents an entity's current financial position by disclosing resources the entity controls (its assets) and the claims on those resources (its liabilities and equity claims), as of a particular point in time (the date of the balance sheet).
Negative screening - CORRECT ANSWER An ESG investment style that focuses on the exclusion of certain sectors, companies, or practices in a fund or portfolio on the basis of specific ESG criteria.
Negative screening - CORRECT ANSWER An ESG investment style that focuses on the exclusion of certain sectors, companies, or practices in a fund or portfolio on the basis of specific ESG criteria.
Neo-Keynesians - CORRECT ANSWER A group of dynamic general equilibrium models that assume slow-to-adjust prices and wages.
Net book value - CORRECT ANSWER The remaining (undepreciated) balance of an asset's purchase cost. For liabilities, the face value of a bond minus any unamortized discount, or plus any unamortized premium.
Net exports - CORRECT ANSWER The difference between the value of a country's exports and the value of its imports (i.e., value of exports minus imports).
Net income - CORRECT ANSWER The difference between revenue and expenses; what remains after subtracting all expenses (including depreciation, interest, and taxes) from revenue.
Net operating cycle - CORRECT ANSWER An estimate of the average time that elapses between paying suppliers for materials and collecting cash from the subsequent sale of goods produced.
Net present value - CORRECT ANSWER (NPV) The present value of an investment's cash inflows (benefits) minus the present value of its cash outflows (costs).
Net present value - CORRECT ANSWER (NPV) The present value of an investment's cash inflows (benefits) minus the present value of its cash outflows (costs).
Net profit margin - CORRECT ANSWER An indicator of profitability, calculated as net income divided by revenue; indicates how much of each dollar of revenues is left after all costs and expenses.
Balance sheet - CORRECT ANSWER The financial statement that presents an entity's current financial position by disclosing resources the entity controls (its assets) and the claims on those resources (its liabilities and equity claims), as of a particular point in time (the date of the balance sheet).
Net profit margin - CORRECT ANSWER An indicator of profitability, calculated as net income divided by revenue; indicates how much of each dollar of revenues is left after all costs and expenses.
Net realisable value - CORRECT ANSWER Estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.
Net revenue - CORRECT ANSWER Revenue after adjustments (e.g., for estimated returns or for amounts unlikely to be collected).
Net tax rate - CORRECT ANSWER The tax rate net of transfer payments.
Neural networks - CORRECT ANSWER Computer programs based on how our own brains learn and process information.
Neutral rate of interest - CORRECT ANSWER The rate of interest that neither spurs on nor slows down the underlying economy.
New classical macroeconomics - CORRECT ANSWER An approach to macroeconomics that seeks the macroeconomic conclusions of individuals maximizing utility on the basis of rational expectations and companies maximizing profits.
New Keynesians - CORRECT ANSWER A group of dynamic general equilibrium models that assume slow-to-adjust prices and wages.
Node - CORRECT ANSWER Each value on a binomial tree from which successive moves or outcomes branch.
Node - CORRECT ANSWER Each value on a binomial tree from which successive moves or outcomes branch.
Balance sheet ratios - CORRECT ANSWER Financial ratios involving balance sheet items only.
No-load fund - CORRECT ANSWER A mutual fund in which there is no fee for investing in the fund or for redeeming fund shares, although there is an annual fee based on a percentage of the fund's net asset value.
Nominal GDP - CORRECT ANSWER The value of goods and services measured at current prices.
Nominal rate - CORRECT ANSWER A rate of interest based on the security's face value.
Nominal risk-free interest rate - CORRECT ANSWER The sum of the real risk-free interest rate and the inflation premium.
Nominal scale - CORRECT ANSWER A measurement scale that categorizes data but does not rank them.
Non-accelerating inflation rate of unemployment - CORRECT ANSWER Effective unemployment rate, below which pressure emerges in labor markets.
Non-agency RMBS - CORRECT ANSWER In the United States, securities issued by private entities that are not guaranteed by a federal agency or a GSE.
Nonconventional cash flow - CORRECT ANSWER In a nonconventional cash flow pattern, the initial outflow is not followed by inflows only, but the cash flows can flip from positive (inflows) to negative (outflows) again (or even change signs several times).
Non-cumulative preference shares - CORRECT ANSWER Preference shares for which dividends that are not paid in the current or subsequent periods are forfeited permanently (instead of being accrued and paid at a later date).
Non-current assets - CORRECT ANSWER Assets that are expected to benefit the company over an extended period of time (usually more than one year).
Balloon payment - CORRECT ANSWER Large payment required at maturity to retire a bond's outstanding principal amount.
Non-current liabilities - CORRECT ANSWER Obligations that broadly represent a probable sacrifice of economic benefits in periods generally greater than one year in the future.
Non-current liabilities - CORRECT ANSWER Obligations that broadly represent a probable sacrifice of economic benefits in periods generally greater than one year in the future.
Non-deliverable forwards - CORRECT ANSWER Cash-settled forward contracts, used predominately with respect to foreign exchange forwards.
Non-financial risks - CORRECT ANSWER Risks that arise from sources other than changes in the external financial markets, such as changes in accounting rules, legal environment, or tax rates.
Nonparametric test - CORRECT ANSWER A test that is not concerned with a parameter, or that makes minimal assumptions about the population from which a sample comes.
Non-participating preference shares - CORRECT ANSWER Preference shares that do not entitle shareholders to share in the profits of the company. Instead, shareholders are only entitled to receive a fixed dividend payment and the par value of the shares in the event of liquidation.
Non-recourse loan - CORRECT ANSWER Loan in which the lender does not have a shortfall claim against the borrower, so the lender can look only to the property to recover the outstanding mortgage balance.
Non-renewable resources - CORRECT ANSWER Finite resources that are depleted once they are consumed, such as oil and coal.
Non-sovereign bonds - CORRECT ANSWER A bond issued by a government below the national level, such as a province, region, state, or city.
Bar chart - CORRECT ANSWER A price chart with four bits of data for each time interval—the high, low, opening, and closing prices. A vertical line connects the high and low. A cross-hatch left indicates the opening price and a cross-hatch right indicates the close.
Non-sovereign government bonds - CORRECT ANSWER A bond issued by a government below the national level, such as a province, region, state, or city.
Nonsystematic risk - CORRECT ANSWER Unique risk that is local or limited to a particular asset or industry that need not affect assets outside of that asset class.
Nonsystematic risk - CORRECT ANSWER Unique risk that is local or limited to a particular asset or industry that need not affect assets outside of that asset class.
Normal distribution - CORRECT ANSWER A continuous, symmetric probability distribution that is completely described by its mean and its variance.
Normal goods - CORRECT ANSWER Goods that are consumed in greater quantities as income increases.
Normal profit - CORRECT ANSWER The level of accounting profit needed to just cover the implicit opportunity costs ignored in accounting costs.
Notching - CORRECT ANSWER Ratings adjustment methodology where specific issues from the same borrower may be assigned different credit ratings.
Note rate - CORRECT ANSWER The interest rate on a mortgage loan.
Notice period - CORRECT ANSWER The length of time (typically 30-90 days) in advance that investors may be required to notify a fund of their intent to redeem some or all of their investment.
Notional principal - CORRECT ANSWER An imputed principal amount.
Barter economy - CORRECT ANSWER An economy where economic agents as house-holds, corporations, and governments "pay" for goods and services with another good or service.
Number of days of inventory - CORRECT ANSWER An activity ratio equal to the number of days in a period divided by the inventory ratio for the period; an indication of the number of days a company ties up funds in inventory.
Number of days of payables - CORRECT ANSWER An activity ratio equal to the number of days in a period divided by the payables turnover ratio for the period; an estimate of the average number of days it takes a company to pay its suppliers.
Number of days of receivables - CORRECT ANSWER Estimate of the average number of days it takes to collect on credit accounts.
Objective probabilities - CORRECT ANSWER Probabilities that generally do not vary from person to person; includes a priori and objective probabilities.
Offer - CORRECT ANSWER The price at which a dealer or trader is willing to sell an asset, typically qualified by a maximum quantity (ask size).
Official interest rate - CORRECT ANSWER An interest rate that a central bank sets and announces publicly; normally the rate at which it is willing to lend money to the commercial banks.
Official policy rate - CORRECT ANSWER An interest rate that a central bank sets and announces publicly; normally the rate at which it is willing to lend money to the commercial banks.
Off-the-run - CORRECT ANSWER Seasoned government bonds are off-the-run securities; they are not the most recently issued or the most actively traded.
Oligopoly - CORRECT ANSWER Market structure with a relatively small number of firms supplying the market.
One-sided hypothesis test - CORRECT ANSWER A test in which the null hypothesis is rejected only if the evidence indicates that the population parameter is greater than (smaller than) θ0. The alternative hypothesis also has one side.
Base rates - CORRECT ANSWER The reference rate on which a bank bases lending rates to all other customers.
One-tailed hypothesis test - CORRECT ANSWER A test in which the null hypothesis is rejected only if the evidence indicates that the population parameter is greater than (smaller than) θ0. The alternative hypothesis also has one side.
On-the-run - CORRECT ANSWER The most recently issued and most actively traded sovereign securities.
On-the-run - CORRECT ANSWER The most recently issued and most actively traded sovereign securities.
Open economy - CORRECT ANSWER An economy that trades with other countries.
Open-end fund - CORRECT ANSWER A mutual fund that accepts new investment money and issues additional shares at a value equal to the net asset value of the fund at the time of investment.
Open interest - CORRECT ANSWER The number of outstanding contracts in a clearinghouse at any given time. The open interest figure changes daily as some parties open up new positions, while other parties offset their old positions.
Open market operations - CORRECT ANSWER The purchase or sale of bonds by the national central bank to implement monetary policy. The bonds traded are usually sovereign bonds issued by the national government.
Open market operations - CORRECT ANSWER The purchase or sale of bonds by the national central bank to implement monetary policy. The bonds traded are usually sovereign bonds issued by the national government.
Operating activities - CORRECT ANSWER Activities that are part of the day-to-day business functioning of an entity, such as selling inventory and providing services.
Operating breakeven - CORRECT ANSWER The number of units produced and sold at which the company's operating profit is zero (revenues = operating costs).
Basic EPS - CORRECT ANSWER Net earnings available to common shareholders (i.e., net income minus preferred dividends) divided by the weighted average number of common shares outstanding.
Operating cash flow - CORRECT ANSWER The net amount of cash provided from operating activities.
Operating cycle - CORRECT ANSWER A measure of the time needed to convert raw materials into cash from a sale; it consists of the number of days of inventory and the number of days of receivables.
Operating efficiency ratios - CORRECT ANSWER Ratios that measure how efficiently a company performs day-to-day tasks, such as the collection of receivables and management of inventory.
Operating lease - CORRECT ANSWER An agreement allowing a lessee to use some asset for a period of time; essentially a rental.
Operating lease - CORRECT ANSWER An agreement allowing a lessee to use some asset for a period of time; essentially a rental.
Operating leverage - CORRECT ANSWER The use of fixed costs in operations.
Operating profit margin - CORRECT ANSWER A profitability ratio calculated as operating income (i.e., income before interest and taxes) divided by revenue.
Operating profit margin - CORRECT ANSWER A profitability ratio calculated as operating income (i.e., income before interest and taxes) divided by revenue.
Operating profit - CORRECT ANSWER A company's profits on its usual business activities before deducting taxes.
Operating risk - CORRECT ANSWER The risk attributed to the operating cost structure, in particular the use of fixed costs in operations; the risk arising from the mix of fixed and variable costs; the risk that a company's operations may be severely affected by environmental, social, and governance risk factors.
Accounting profit - CORRECT ANSWER Income as reported on the income statement, in accordance with prevailing accounting standards, before the provisions for income tax expense.
Basic EPS - CORRECT ANSWER Net earnings available to common shareholders (i.e., net income minus preferred dividends) divided by the weighted average number of common shares outstanding.
Operating risk - CORRECT ANSWER The risk attributed to the operating cost structure, in particular the use of fixed costs in operations; the risk arising from the mix of fixed and variable costs; the risk that a company's operations may be severely affected by environmental, social, and governance risk factors.
Operational independence - CORRECT ANSWER A bank's ability to execute monetary policy and set interest rates in the way it thought would best meet the inflation target.
Operationally efficient - CORRECT ANSWER Said of a market, a financial system, or an economy that has relatively low transaction costs.
Operational risk - CORRECT ANSWER The risk that arises from inadequate or failed people, systems, and internal policies, procedures, and processes, as well as from external events that are beyond the control of the organization but that affect its operations.
Opportunity cost - CORRECT ANSWER The value that investors forgo by choosing a particular course of action; the value of something in its best alternative use.
Opportunity cost - CORRECT ANSWER The value that investors forgo by choosing a particular course of action; the value of something in its best alternative use.
Opportunity cost - CORRECT ANSWER The value that investors forgo by choosing a particular course of action; the value of something in its best alternative use.
Opportunity cost - CORRECT ANSWER The value that investors forgo by choosing a particular course of action; the value of something in its best alternative use.
Option-adjusted price - CORRECT ANSWER The value of the embedded option plus the flat price of the bond.
Option-adjusted spread - CORRECT ANSWER OAS = Z-spread - Option value (in basis points per year).
Basis point - CORRECT ANSWER Used in stating yield spreads, one basis point equals one-hundredth of a percentage point, or 0.01%.
Option-adjusted yield - CORRECT ANSWER The required market discount rate whereby the price is adjusted for the value of the embedded option.
Option contract - CORRECT ANSWER A financial instrument that gives one party the right, but not the obligation, to buy or sell an underlying asset from or to another party at a fixed price over a specific period of time.
Option - CORRECT ANSWER A financial instrument that gives one party the right, but not the obligation, to buy or sell an underlying asset from or to another party at a fixed price over a specific period of time.
Option - CORRECT ANSWER A financial instrument that gives one party the right, but not the obligation, to buy or sell an underlying asset from or to another party at a fixed price over a specific period of time.
Option - CORRECT ANSWER A financial instrument that gives one party the right, but not the obligation, to buy or sell an underlying asset from or to another party at a fixed price over a specific period of time.
Option premium - CORRECT ANSWER The amount of money a buyer pays and seller receives to engage in an option transaction.
Order-driven markets - CORRECT ANSWER A market (generally an auction market) that uses rules to arrange trades based on the orders that traders submit; in their pure form, such markets do not make use of dealers.
Order - CORRECT ANSWER A specification of what instrument to trade, how much to trade, and whether to buy or sell.
Order precedence hierarchy - CORRECT ANSWER With respect to the execution of orders to trade, a set of rules that determines which orders execute before other orders.
Ordinal scale - CORRECT ANSWER A measurement scale that sorts data into categories that are ordered (ranked) with respect to some characteristic.
Basis point - CORRECT ANSWER Used in stating yield spreads, one basis point equals one-hundredth of a percentage point, or 0.01%.
Ordinary annuity - CORRECT ANSWER An annuity with a first cash flow that is paid one period from the present.
Ordinary shares - CORRECT ANSWER Equity shares that are subordinate to all other types of equity (e.g., preferred equity).
Organized exchange - CORRECT ANSWER A securities marketplace where buyers and seller can meet to arrange their trades.
Other comprehensive income - CORRECT ANSWER Items of comprehensive income that are not reported on the income statement; comprehensive income minus net income.
Outcome - CORRECT ANSWER A possible value of a random variable.
Out-of-sample test - CORRECT ANSWER A test of a strategy or model using a sample outside the time period on which the strategy or model was developed.
Out of the money - CORRECT ANSWER Options that, if exercised, would require the payment of more money than the value received and therefore would not be currently exercised.
Out of the money - CORRECT ANSWER Options that, if exercised, would require the payment of more money than the value received and therefore would not be currently exercised.
Overbought - CORRECT ANSWER A market condition in which market sentiment is thought to be unsustainably bullish.
Overcollateralization - CORRECT ANSWER Form of internal credit enhancement that refers to the process of posting more collateral than needed to obtain or secure financing.
Basket of listed depository receipts - CORRECT ANSWER An exchange-traded fund (ETF) that represents a portfolio of depository receipts.
Overfitting - CORRECT ANSWER An undesirable result from fitting a model so closely to a dataset that it does not perform well on new data.
Overlay/portfolio tilt - CORRECT ANSWER An ESG investment style that focuses on the use of certain investment strategies or products to change specific aggregate ESG characteristics of a fund or investment portfolio to a desired level (e.g., tilting an investment portfolio toward a desired carbon footprint).
Oversold - CORRECT ANSWER A market condition in which market sentiment is thought to be unsustainably bearish.
Over-the-counter (OTC) markets - CORRECT ANSWER A decentralized market where buy and sell orders initiated from various locations are matched through a communications network.
Owners' equity - CORRECT ANSWER The excess of assets over liabilities; the residual interest of shareholders in the assets of an entity after deducting the entity's liabilities.
Owners' equity - CORRECT ANSWER The excess of assets over liabilities; the residual interest of shareholders in the assets of an entity after deducting the entity's liabilities.
Own-price elasticity of demand - CORRECT ANSWER The percentage change in quantity demanded for a percentage change in good's own price, holding all other things constant.
Own price - CORRECT ANSWER The price of a good or service itself (as opposed to the price of something else).
Paasche index - CORRECT ANSWER An index formula using the current composition of a basket of products.
Paired comparisons test - CORRECT ANSWER A statistical test for differences based on paired observations drawn from samples that are dependent on each other.
Bearer bonds - CORRECT ANSWER Bonds for which ownership is not recorded; only the clearing system knows who the bond owner is.
Paired observations - CORRECT ANSWER Observations that are dependent on each other.
Pairs arbitrage trade - CORRECT ANSWER A trade in two closely related stocks involving the short sale of one and the purchase of the other.
Panel data - CORRECT ANSWER Observations through time on a single characteristic of multiple observational units.
Parallel shift - CORRECT ANSWER A parallel yield curve shift implies that all rates change by the same amount in the same direction.
Parameter - CORRECT ANSWER A descriptive measure computed from or used to describe a population of data, conventionally represented by Greek letters.
Parameter - CORRECT ANSWER A descriptive measure computed from or used to describe a population of data, conventionally represented by Greek letters.
Parametric test - CORRECT ANSWER Any test (or procedure) concerned with parameters or whose validity depends on assumptions concerning the population generating the sample.
Par curve - CORRECT ANSWER A sequence of yields-to-maturity such that each bond is priced at par value. The bonds are assumed to have the same currency, credit risk, liquidity, tax status, and annual yields stated for the same periodicity.
Pari passu - CORRECT ANSWER On an equal footing.
Partial duration - CORRECT ANSWER A method of measuring the interest rate sensitivities of a fixed-income instrument or portfolio to shifts in key points along the yield curve.
Behavioral finance - CORRECT ANSWER A field of finance that examines the psychological variables that affect and often distort the investment decision making of investors, analysts, and portfolio managers.
Participating preference shares - CORRECT ANSWER Preference shares that entitle shareholders to receive the standard preferred dividend plus the opportunity to receive an additional dividend if the company's profits exceed a pre-specified level.
Par value - CORRECT ANSWER The amount of principal on a bond.
Passive investment - CORRECT ANSWER A buy and hold approach in which an investor does not make portfolio changes based on short-term expectations of changing market or security performance.
Passive strategy - CORRECT ANSWER In reference to short-term cash management, it is an investment strategy characterized by simple decision rules for making daily investments.
Pass-through rate - CORRECT ANSWER The coupon rate of a mortgage pass-through security.
Payable date - CORRECT ANSWER The day that the company actually mails out (or electronically transfers) a dividend payment.
Payback period - CORRECT ANSWER the number of years required to recover the original investment in a project. The payback is based on cash flows.
Payment date - CORRECT ANSWER The day that the company actually mails out (or electronically transfers) a dividend payment.
Payments system - CORRECT ANSWER The system for the transfer of money.
Peak - CORRECT ANSWER The highest point of a business cycle.
Behind the market - CORRECT ANSWER Said of prices specified in orders that are worse than the best current price; e.g., for a limit buy order, a limit price below the best bid.
Peer group - CORRECT ANSWER A group of companies engaged in similar business activities whose economics and valuation are influenced by closely related factors.
Pennants - CORRECT ANSWER A technical analysis continuation pattern formed by trendlines that converge to form a triangle, typically over a short period.
Per capita real GDP - CORRECT ANSWER Real GDP divided by the size of the population, often used as a measure of the average standard of living in a country.
Percentiles - CORRECT ANSWER Quantiles that divide a distribution into 100 equal parts.
Perfect competition - CORRECT ANSWER A market structure in which the individual firm has virtually no impact on market price, because it is assumed to be a very small seller among a very large number of firms selling essentially identical products.
Perfectly elastic - CORRECT ANSWER When the quantity demanded or supplied of a given good is infinitely sensitive to a change in the value of a specified variable (e.g., price).
Perfectly inelastic - CORRECT ANSWER When the quantity demanded or supplied of a given good is completely insensitive to a change in the value of a specified variable (e.g., price).
Performance bond - CORRECT ANSWER A cash deposit required by the clearinghouse from the participants to a contract to provide a credit guarantee.
Performance evaluation - CORRECT ANSWER The measurement and assessment of the outcomes of investment management decisions.
Performance fee - CORRECT ANSWER Fees paid to the general partner from the limited partner(s) based on realized net profits.
Benchmark issue - CORRECT ANSWER The latest sovereign bond issue for a given maturity. It serves as a benchmark against which to compare bonds that have the same features but that are issued by another type of issuer.
Period costs - CORRECT ANSWER Costs (e.g., executives' salaries) that cannot be directly matched with the timing of revenues and which are thus expensed immediately.
Periodicity - CORRECT ANSWER The assumed number of periods in the year, typically matches the frequency of coupon payments.
Permanent differences - CORRECT ANSWER Differences between tax and financial reporting of revenue (expenses) that will not be reversed at some future date. These result in a difference between the company's effective tax rate and statutory tax rate and do not result in a deferred tax item.
Permissioned networks - CORRECT ANSWER Networks that are fully open only to select participants on a DLT network.
Permissionless networks - CORRECT ANSWER Networks that are fully open to any user on a DLT network.
Permutation - CORRECT ANSWER An ordered listing.
Perpetual bonds - CORRECT ANSWER Bonds with no stated maturity date.
Perpetuity - CORRECT ANSWER A perpetual annuity, or a set of never-ending level sequential cash flows, with the first cash flow occurring one period from now. A bond that does not mature.
Perpetuity - CORRECT ANSWER A perpetual annuity, or a set of never-ending level sequential cash flows, with the first cash flow occurring one period from now. A bond that does not mature.
Personal consumption expenditures - CORRECT ANSWER All domestic personal consumption; the basis for a price index for such consumption called the PCE price index.
Benchmark - CORRECT ANSWER A comparison portfolio; a point of reference or comparison.
Personal disposable income - CORRECT ANSWER Equal to personal income less personal taxes.
Personal income - CORRECT ANSWER A broad measure of household income that includes all income received by households, whether earned or unearned; measures the ability of consumers to make purchases.
Per unit contribution margin - CORRECT ANSWER The amount that each unit sold contributes to covering fixed costs—that is, the difference between the price per unit and the variable cost per unit.
Plain vanilla bond - CORRECT ANSWER Bond that makes periodic, fixed coupon payments during the bond's life and a lump-sum payment of principal at maturity.
Platykurtic - CORRECT ANSWER Describes a distribution that has relatively less weight in the tails than the normal distribution.
Point and figure chart - CORRECT ANSWER A technical analysis chart that is constructed with columns of X's alternating with columns of O's such that the horizontal axis represents only the number of changes in price without reference to time or volume.
Point estimate - CORRECT ANSWER A single numerical estimate of an unknown quantity, such as a population parameter.
Point of sale (POS) - CORRECT ANSWER Systems that capture transaction data at the physical location in which the sale is made.
Policy rate - CORRECT ANSWER An interest rate that a central bank sets and announces publicly; normally the rate at which it is willing to lend money to the commercial banks.
Population mean - CORRECT ANSWER The arithmetic mean value of a population; the arithmetic mean of all the observations or values in the population.
Benchmark rate - CORRECT ANSWER Typically the yield-to-maturity on a government bond having the same, or close to the same, time-to-maturity.
Population - CORRECT ANSWER All members of a specified group.
Population standard deviation - CORRECT ANSWER A measure of dispersion relating to a population in the same unit of measurement as the observations, calculated as the positive square root of the population variance.
Population variance - CORRECT ANSWER A measure of dispersion relating to a population, calculated as the mean of the squared deviations around the population mean.
Portfolio company - CORRECT ANSWER In private equity, the company in which the private equity fund is investing.
Portfolio demand for money - CORRECT ANSWER The demand to hold speculative money balances based on the potential opportunities or risks that are inherent in other financial instruments.
Portfolio planning - CORRECT ANSWER The process of creating a plan for building a portfolio that is expected to satisfy a client's investment objectives.
Position - CORRECT ANSWER The quantity of an asset that an entity owns or owes.
Positive screening - CORRECT ANSWER An ESG investment style that focuses on the inclusion of certain sectors, companies, or practices in a fund or portfolio on the basis of specific minimum ESG criteria.
Posterior probability - CORRECT ANSWER An updated probability that reflects or comes after new information.
Potential GDP - CORRECT ANSWER The level of real GDP that can be produced at full employment; measures the productive capacity of the economy.
Accounting profit - CORRECT ANSWER Income as reported on the income statement, in accordance with prevailing accounting standards, before the provisions for income tax expense.
Benchmark spread - CORRECT ANSWER The yield spread over a specific benchmark, usually measured in basis points. [Show Less]