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• A priori probability

  A probability based on logical analysis rather than on observation or personal judgment.

  CFA Program Level I

• Abandonment option

  The ability to terminate a project at some future time if the financial results are disappointing.

  CFA Program Level I CFA Program Level II

• Abnormal earnings

  See residual income.

  Related Terms: Residual income Economic profit

  CFA Program Level III

• Absolute dispersion

  The amount of variability present without comparison to any reference point or benchmark.

  CFA Program Level I

• Absolute frequency

  The number of observations in a given interval (for grouped data).

  CFA Program Level I

• Absolute-return vehicles

  Investments that have no direct benchmark portfolios.

  CFA Program Level II

• Accelerated methods of depreciation

  Depreciation methods that allocate a relatively large proportion of the cost of an asset to the early years of the asset’s useful life.

  CFA Program Level I

• Account

  With the accounting systems, a formal record of increases and decreases in a specific asset, liability, component of owners’ equity, revenue, or expense.

  CFA Program Level I

• Accounting estimates

  Estimates of items such as the useful lives of assets, warranty costs, and the amount of uncollectible receivables.

  CFA Program Level I

• Accounting profit

  Income as reported on the income statement, in accordance with prevailing accounting standards, before the provisions for income tax expense.

  Synonyms: income before taxes pretax income

  CFA Program Level I