A full glossary of financial terms, sourced from the CFA Program curriculum.

  • 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.

    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