CFA Institute Investment Foundations Certificate Terms
& Definitions Questions 100% Helpful
Active investment managers - ANS ✔ - Investment managers who try to predict which securities and
assets will outperform or underperform comparable securities and assets and who act on their
opinions by buying the securities and assets that they expect to outperform and selling (or simply
not buying) the securities and assets that they expect to underperform.
Ad hoc documents - ANS ✔ - documents that are typically informal, such as letters, memos, and emails
Adverse selection - ANS ✔ - tendency of people who are most at risk to buy insurance, causing insured
losses to be greater than average losses
Allocationally efficient economies - ANS ✔ - economies that use resources where they are the most
valuable
Alpha - ANS ✔ - outperformance relative to a relevant market benchmark
Alternative investments - ANS ✔ - a diverse asset class that typically includes private equity, real
estate, and commodities. It provides an alternative to traditional investments, such as debt and equity
securities
Amortization - ANS ✔ - the process of expensing the costs of intangible assets over their useful lives
Annual percentage rate - ANS ✔ - the cost of borrowing expressed as a yearly rate without
compounding
Annuity - ANS ✔ - the exchange of an initial amount for a fixed number of future payments of a certain
amount
Appraisal - ANS ✔ - assessment or estimation of the value of an asset, such as real estate, that is
subject to certain assumptions, which may not always be realistic
& Definitions Questions 100% Helpful
Active investment managers - ANS ✔ - Investment managers who try to predict which securities and
assets will outperform or underperform comparable securities and assets and who act on their
opinions by buying the securities and assets that they expect to outperform and selling (or simply
not buying) the securities and assets that they expect to underperform.
Ad hoc documents - ANS ✔ - documents that are typically informal, such as letters, memos, and emails
Adverse selection - ANS ✔ - tendency of people who are most at risk to buy insurance, causing insured
losses to be greater than average losses
Allocationally efficient economies - ANS ✔ - economies that use resources where they are the most
valuable
Alpha - ANS ✔ - outperformance relative to a relevant market benchmark
Alternative investments - ANS ✔ - a diverse asset class that typically includes private equity, real
estate, and commodities. It provides an alternative to traditional investments, such as debt and equity
securities
Amortization - ANS ✔ - the process of expensing the costs of intangible assets over their useful lives
Annual percentage rate - ANS ✔ - the cost of borrowing expressed as a yearly rate without
compounding
Annuity - ANS ✔ - the exchange of an initial amount for a fixed number of future payments of a certain
amount
Appraisal - ANS ✔ - assessment or estimation of the value of an asset, such as real estate, that is
subject to certain assumptions, which may not always be realistic
