SASB FSA LEVEL II TEST GUIDE
QUESTIONS AND ANSWERS
systemic risk - Answer- the risk of collapse of an entire financial system or an entire
market related to broad-reaching factors and an entity's connections to these systems
or institutions
systemically important - Answer- an institution whose failure could trigger a financial
crisis, typically associated with banks
terminal value - Answer- the value of a business, investment, security, or project at a
future point beyond the forecast period, assuming a stable growth rate in perpetuity
turnover ratio - Answer- a financial ratio used to determine how effectively a company is
utilizing its assets, represented by the value of a company's sales generated relative to
the value of its assets.
Activity metric - Answer- NNN is used in a given SASB Standard to quantify the scale of
a business, used in conjunction with accounting metrics to normalize data and facilitate
comparison.
actual impacts - Answer- financial impacts that are already occurring or that currently
affect a company's financial statements
acute impacts - Answer- high magnitude financial impacts that are associated with one-
time events. They tend to have direct and immediate effects on a company's financial
statements
Churn - Answer- in business, the rate at which customers no longer do business with a
company. A measure of customer attrition.
comparative analysis - Answer- the process of comparing a company's performance on
the same metric(s) against its own past performance, the performance of peer
companies, and against benchmarks and targets, including industry averages, to
distinguish similarities and differences and inform projections
credit spread - Answer- the difference between the yield, or return, of two debt
instruments with the same time to maturity but different credit quality. It is used by
investors to determine the additional return required for taking on additional risk
decoupled rate structures - Answer- the disassociation of a utility's profits from the sale
of energy, enabling improved energy efficiency and often helping to reduce greenhouse
gas emissions
QUESTIONS AND ANSWERS
systemic risk - Answer- the risk of collapse of an entire financial system or an entire
market related to broad-reaching factors and an entity's connections to these systems
or institutions
systemically important - Answer- an institution whose failure could trigger a financial
crisis, typically associated with banks
terminal value - Answer- the value of a business, investment, security, or project at a
future point beyond the forecast period, assuming a stable growth rate in perpetuity
turnover ratio - Answer- a financial ratio used to determine how effectively a company is
utilizing its assets, represented by the value of a company's sales generated relative to
the value of its assets.
Activity metric - Answer- NNN is used in a given SASB Standard to quantify the scale of
a business, used in conjunction with accounting metrics to normalize data and facilitate
comparison.
actual impacts - Answer- financial impacts that are already occurring or that currently
affect a company's financial statements
acute impacts - Answer- high magnitude financial impacts that are associated with one-
time events. They tend to have direct and immediate effects on a company's financial
statements
Churn - Answer- in business, the rate at which customers no longer do business with a
company. A measure of customer attrition.
comparative analysis - Answer- the process of comparing a company's performance on
the same metric(s) against its own past performance, the performance of peer
companies, and against benchmarks and targets, including industry averages, to
distinguish similarities and differences and inform projections
credit spread - Answer- the difference between the yield, or return, of two debt
instruments with the same time to maturity but different credit quality. It is used by
investors to determine the additional return required for taking on additional risk
decoupled rate structures - Answer- the disassociation of a utility's profits from the sale
of energy, enabling improved energy efficiency and often helping to reduce greenhouse
gas emissions
