CFA Program - Acronym Guidelines for Level II

Candidates are responsible for knowing and understanding the following acronyms, which may
appear in CFA Program Level II item set exam questions.

Currency/Economics
EUR =Euro
GBP =British pound
J PY =J apanese Yen
USD =U.S. dollar
PPP =Purchasing Power Parity

Financial Reporting and Analysis
FIFO =First-In, First-Out
LIFO =Last-In, First-Out
PP&E (or PPE) =Property, Plant, & Equipment
IFRS =International Financial Reporting Standards
U.S. GAAP =U.S. Generally Accepted Accounting Principles

Corporate Finance
IRR =Internal Rate of Return
NPV =Net Present Value

Valuation
EBIT =Earnings Before Interest, and Taxes
EBITDA =Earnings Before Interest, Taxes, Depreciation, and Amortization
EPS =Earnings per Share
EV =Enterprise Value
FCFE =Free Cash Flow to Equity
FCFF =Free Cash Flow to the Firm
P/E ratio =Price-to-Earnings ratio
D/E =Debt-to-Equity ratio
ROE =Return On Equity
WACC =Weighted Average Cost of Capital
DCF =Discounted Cash Flow
DDM =Dividend Discount Model
PEG ratio =P/E to growth ratio


Assets: Fixed Income/Derivatives/Equity/Alternatives
ABS =Asset-backed Security
MBS =Mortgage-backed Security
CDO =Collateralized Debt Obligation
CMO =Collateralized Mortgage Obligation
LIBOR =London Interbank Offered Rate
OAS =Option Adjusted Spread
CDS =Credit Default Swap
IPO =Initial Public Offering
NAV =Net Asset Value
ETF =Exchange-traded Fund
REIT =Real Estate Investment Trust

Portfolio Management
IPS =Investment Policy Statement
CAPM =Capital Asset Pricing Model
CML =Capital Market Line
VAR =Value at Risk