CFA Level I Glossary — Key Terms & Definitions
- Backwardation / contango
- Central limit theorem
- Covenant
- Deferred tax liability/asset
- Duration gap
- High-water mark
- Money duration
- Money-weighted return
- Prepayment risk
- Pseudo-random seed
- The 90-Second Operating Rhythm
- Arbitrage
- Catch-up
- Early amortization
- Empirical duration
- Fallen angel
- Fiscal dominance
- Fraud triangle
- Free float
- Mosaic theory
- Option-adjusted spread
- Periodicity
- Stop order
- Time-weighted return
- Variation margin
- Window dressing
- Accrued interest
- Balance of payments
- Contraction / extension risk
- Derecognition
- Efficiency (estimator)
- If-converted method
- Lockout period
- Matrix pricing
- Notching
- Pull to par
- Sortino ratio
- Standard error of the estimate
- Structural subordination
- Controlled amortization
- Duration (Macaulay/modified/effective)
- Impairment
- Investment property
- Key rate duration
- Look-ahead bias
- Negative convexity
- Profitability index
- Sum-of-the-parts
- Time tranching
- Treasury stock method
- Z-spread
- Antidilutive security
- Coefficient of variation
- Conditional expectation
- Currency board
- Discouraged worker
- Effective interest method
- Justified multiple
- On-the-run
- Quality spectrum
- Repurchase agreement
- Residual income
- Sharpe ratio
- Unearned (deferred) revenue
- Add-on rate
- American vs European waterfall
- Base rate
- Bond-equivalent yield
- Bootstrap resampling
- Covered bond
- Credit enhancement
- Crossover rate
- Discount margin
- Economic profit
- Expected shortfall
- Fiduciary call / protective put
- Geometric mean
- Hedge ratio
- The LIFO-to-FIFO Conversion Protocol
- Topic Triage Methodology
- Willingness vs. ability
- Alternative data
- Basis risk
- Cap rate
- Cash conversion cycle
- Clawback
- Conversion premium
- Effective annual rate
- Efficient frontier
- Material nonpublic information
- Monetary union
- Pecking order
- Put–call parity
- Risk budgeting
- TERP Concept
- Carried interest
- Consistency (estimator)
- Convexity
- Defensive interval ratio
- Enterprise value
- GDP deflator
- Hurdle rate
- Lease receivable
- LIFO reserve
- Minimum efficient scale
- Participation rate
- PEG ratio
- Risk-neutral probability
- Roll yield
- Support tranche
- The Exogenous Spread LVaR Adjustment
- Yield to worst
- Accounting Rule: IFRS Inventory Valuation
- Concept: Standard V(A) - Diligence and Reasonable Basis
- Concept: TWRR
- Accounting Rule: Investment Property (IFRS)
- Concept: Beneficial Ownership
- Concept: Bootstrap Resampling
- Classification of 'Investment Property' under IFRS
- Classification Rule: US\ GAAP Dividends Paid
- Concept: Sustainable Growth Rate (g)
- Concept: Standard of Practice I(B) Independence and Objectivity
- Concept: Harmonic Mean
- Critical Formula: Leveraged Return (R_L)
- Concept: Conversion
- Concept: M^2 (M-squared)
- Concept: Mosaic Theory
- Concept: MWRR
- Classification Rule: US\ GAAP Interest Paid
- Concept: Beta (β_i)
- Concept: Beta (β)
- Concept: Reversal
- Concept: Holding Period Return (HPR)
- Concept: Risk-Neutral Probability (π)
- Critical Formula: Approximation for Real Return
- Critical Formula: Harmonic Mean of n observations (X_H)
- Critical Formula: Holding Period Return (HPR)
- Critical Formula: Log Return Additivity
- Critical Rule: IFRS vs US GAAP Lease Expense
- Critical Formula: Ordinary Annuity Present Value Factor (A)
- Critical Formula: Money-Weighted Rate of Return (MWRR)
- Definition: Z-spread
- Definition: Empirical Duration
- Ethics Trigger: Standard III(D) Performance Presentation
- Ethics Trigger: Standard VI(B) Priority of Transactions
- Formula for the EV/EBITDA multiple
- Formula: $g = r - \frac{D_1}{P_0}$
- Formula: 5-way DuPont decomposition of ROE
- Formula: Beta (β_i) using covariance
- Formula: $R_{HP} = \frac{P_1 - P_0 + D_1}{P_0}$
- Formula: Beta (β) calculated from covariance
- Formula: FIFO Inventory conversion from LIFO
- Formula: Covered Interest Rate Parity (CIP)
- Formula: Effective Annual Rate (EAR)
- Formula: Net Income adjustment for a LIFO-to-FIFO conversion
- Formula: Real rate of return (Exact Fisher Relation)
- IFRS classification: Dividends Paid
- IFRS classification: Interest Paid
- Return Concept: Define a "Trimmed mean."
- Return Concept: Define a "Winsorized mean."
- Standard VI(A): Avoid or Disclose Conflicts
- Term: Accrued Interest
- Term: Bootstrap Resampling
- Term: Bottom-up forecasting
- Term: Idiosyncratic Risk
- Term: Internal Rate of Return (IRR)
- Term: IPO (Initial Public Offering)
- Term: Jensen's Alpha
- Term: Macaulay Duration
- Term: Mosaic Theory
- Term: Rebalancing
- Term: Soft Dollars
- Term: Top-down forecasting
- Term: Systematic Risk
- Treatment of internally generated development costs under IFRS