EMT Practice Test

1. Question Content...

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Question1: The two most common types of commercial insurance companies are:

Question2: Elements of information and process integrity are that it should be authorized, accurate, complete, timely, recorded processed, and reported in the proper time. Each of the elements in the above has a relationship to the:

Question3: The primary component of the McCarran-Ferguson Act is/are:

Question4: HMO (Health maintenance organization) must meet the specifications of the federal HMO act as well as meeting many rules and regulations required at state level. There are following basic models EXCEPT:

Question5: Banks generally record securities transactions as of trade date. However, it is acceptable to record the transactions as of the _________ if the difference between the settlement date and trade date is not materially different.

Question6: A manager of a very controversial program may have stolen only $200, but the controversy and public accountability aspects may make the 200 significant, where it would not be material private sector financial statement opinion audit. It means:

Question7: Unsecured bonds are not backed by assets and provide no claim on assets for bondholders These include:

Question8: Deposit in many banks are insured by the ______________, which ensure that depositors will get their money back up to a stated limit, if a bank should fail:

Question9: Risks related to assets/liability management that auditors should be aware of include all of the following EXCEPT:

Question10: The accumulation phase in annuities can last from as long as:

Question11: IIA's code of ethics applies to __________ that provide internal auditing services:

Question12: I - In term life insurance premium increase with age no cash value.
II- In whole life insurance high cost is involved if you surrender early. Usually no cash value for at least three to five years. So, may not meet short-term needs.
III - Universal life insurance is also same a whole life and buyer assumes greater risk due to program flexibility. Low interest rates can affect cash value and premiums.
These are the __________ of different types of life insurances.

Question13: Cash and due from other bank accounts that are listed as a caption on the balance sheet include all currency and coin, cash being collected, and account balances with other banks:

Question14: Continuous monitoring in systems and networks is a by-product of the increasing demand for immediate and continuous access to reliable information. Advancements in information monitoring and analysis are being accelerated both by increasing demands for timely and accurate information and by advances in technology that contribute to the:

Question15: Insiders are generally barred from:

Question16: "A valid contract involves each party giving something of value. This exchange of value, or consideration, may take the form of money, action, or promise. For insurance contracts, the insured's consideration is the payment or premiums and a promise to fulfill the conditions of the contracts, and the insurer's consideration is the promise to pay after a loss occurs." This is related to an element in an insurance policy contract. It is known as:

Question17: Preliminary prospectuses are often called:

Question18: Workpapers serve as the connecting link between the audit assignment, the auditor's fieldwork, and the final report. Most importantly, the workpapers document the auditor's conclusions and the reasons those conclusions were reached. Workpapers also provide a basis for demonstrating compliance with the IIA's Standards. Among other things, workpapers may include all of the following EXCEPT:

Question19: Some of the risks associated with bond funds are all of the following EXCEPT:

Question20: Most municipal and corporate bonds are rated by an independent rating firm such as Standard & Poor's (S&P) or Moody's. These ratings provide investors with information regarding the risk of default on the bond issue. The higher rated bonds are considered _________.

Question21: Correspondent banks, Credit party, Draw down, Execution date, Remitter, and Repetitive transfer are some terminologies related to:

Question22: _____________ insures two lives under one policy. Death benefits are paid to the surviving insured. The surviving insured usually has the option of purchasing an individual whole life policy of the same face amount without providing evidence of insurability.

Question23: In the United States, banks are required to report cash deposits that exceed $10,000 a day to any one account, regardless of how many branches or deposits have been used in the transactions. Banks are also required to report when cash is used to purchase cashier's checks, money orders, traveler's checks, or bank checks in excess of $3000. In the Untied States, accounts are federally insured by the Federal Deposit Insurance Corporations (FDIC). An individual is limited to __________ in insurance coverage at each bank (including branches).

Question24: Management must ___________ assess business risk and develop clearly defined control objectives:

Question25: Federal Reserve's duties fall into following general areas EXCEPT:

Question26: Insurance companies decide on a _________ whether an investigation is necessary

Question27: The objective/s of trust department's administration of corporate trust accounts include:
I. Policies and producers ensure compliance with governing instruments, applicable law and accepted fiduciary principles
II. Deficiencies are identified and corrective action is promptly initiated III. There is sufficient management and staff expertise to administer these accounts IV. Effective policies, procedures and internal controls have been established
V. The legitimate needs of security holders and other interested parties are met in a professional and timely manner

Question28: Traditionally, insurance is paid:

Question29: Basic control/s to consider when auditing derivates strategies is/are:

Question30: Life insurance that can be made valid up to a certain age or period is called ___________. This insurance coverage continues up until an agreed time without having to be renewed.

Question31: EFRAG is the abbreviation of:

Question32: Other asset categories are mentioned in:

Question33: Personal trust accounts may be:

Question34: You are auditing the claim handing of your branch office. You note that one of the claims is for lost revenue due to a windstorm damaging the building. The claim file states that the insured requested coverage for this type of loss. However, the independent agent failed to request the coverage though an oversight.
Which action is required to appropriately handle the claim?

Question35: High-risk scores are those with an average of scores:

Question36: Call provisions are often part of ______________, but usually not bonds issued by ______________.

Question37: Sarbanes Oxley and bases are:

Question38: Which statement is correct concerning commercial letters of credit?

Question39: A UIT typically issues redeemable securities (or "units"), like a mutual fund, which means:

Question40: Reviewing counterparties for creditworthiness and obtaining master trade agreements and credit approval for counterparties before entering into a repurchase or reverse repurchase agreement Obtaining collateral from the counterparty Marking to market all collateral daily; if a deficit (within established guidelines) exists, additional collateral may be obtained from the counterparty Reconciling the repurchase and reverse repurchase subsidiary ledgers to the stock record and general ledger daily. Out-of-balances are recorded as suspense items and researched immediately These are actually:

Question41: Which of the following statements is NOT related to competency principle of internal auditing? Internal auditors:

Question42: Personal liability covers claims for bodily injury or property damage caused by the insured. And, Medical payment provides a low level of medical payment to help avoid legal action between the insured and the injured part, regardless of whether or not the insured is legally liable for the incident. These are two major types of liability coverage provided by:

Question43: If a corporation has an asset sensitive gap in a rising rate environment, which of the following would be considered an appropriate hedging strategy to prevent a decrease in net interest income?

Question44: Whole life insurance protects for:

Question45: All these statements elaborate purpose of standards EXCEPT:

Question46: "Ongoing monitoring activities are conducted to periodically reassess risk and the effectiveness of control risk," is an objective of:

Question47: Which of the following would not generally be a responsibility of an underwriting department?

Question48: Surrender charges usually apply only if the annuity has been in free:

Question49: Commercial, residential and consumer are three basic types of:

Question50: An intelligent risks management platform approaches risk from the:

Question51: Which of the following steps is/are NOT considered in the audit planning process?

Question52: Audit objectives that apply to one sales portion are all EXCEPT:

Question53: These policies provide a death benefit when the insured dies during a specified period. The term of this type of policy is usually not less than one year, but may be up to 40 years or more. It provides only temporary protection because coverage ends at the end of the term of coverage stated in the policy. What are these?

Question54: ___________ are a type of mutual funds that is required by law to invest in highly liquid and low-risk securities such as certificates of deposits or government securities. These funds pay dividends that generally reflect short-term interest rates and are not federally insured. Due to low-risk nature of the investments, these funds rarely lose money.

Question55: Interest rates offered on new CDs changes:

Question56: Which of the following is a limitation in an audit that affects auditors' ability to detect material misstatements?

Question57: In a price risk situation if customers withdraw their applications a bank may be unable to originate enough loans to meet its forward sales commitments .Because of this kind of "Fallout" a bank may have to purchase additional loans in the secondary market at prices higher than anticipated. Alternatively, a bank may choose to liquidate its commitment to sell and deliver mortgages by paying a fee to the counterparty commonly called a ______________.

Question58: Insurance is a method of transferring, for a fee, the financing responsibility for the risk to another party.
Insurance polices are legal contracts. There are four elements that constitute a legal, binding contract.
Which of the following is NOT out of those elements?

Question59: Watch lists of loans that are in danger of becoming delinquent generally contain information on such as:

Question60: After implementation of a drop out recovery program, employment rate rose. The drop out recovery program is responsible for increases in employment and look for possible economic or other factors that might have contributed to the rise. This example may be referred towards:

Question61: Municipal bonds are issued by state and local governments, U.S. territories, and non-federal public agencies such as school districts, cities, and airport authorities. Municipal debt is considered the second safest form of debt security after U.S. government obligations. Some types of municipal bonds include all of the following EXCEPT:

Question62: Optional basic and supplement life insurances are the variants of:

Question63: The "combined ratio" of an insurance company is the ratio from combining which of the following?
I. The "loss ratio."
II. The "other underwriting expense ratio."
III. The "expense ratio."
IV. The "IBNR."

Question64: I. Surrender Changes
II. Mortality and Expense risk change
III. Administrative Fees
IV. Underlying funds expenses
V. Fees charges for other features
These are the charges which investors pay when they invest in:

Question65: ___________ result from a failure to follow the logic of a series of statements.

Question66: Which one of the following is not commonly granted trustee's powers?

Question67: The due from bank either credits the due to bank's account or pays the due to bank directly with a
______________.

Question68: Group insurance policies typically include a preexisting condition provision that excludes:

Question69: The management of index funds is _________ than the management of non-index funds, because an index fund manager only needs to track a relatively fixed index of securities.

Question70: ___________ supervise domestic and international activities of national banks and perform corporate analysis.

Question71: One of the largest components of the global derivative markets and natural adjunct to the fixed income markets is the:

Question72: Negotiable certificates are:

Question73: Banks provide the following personal trust services for individuals EXCEPT:

Question74: Which of the following are typical information system controls that are used to ensure properly authorized transaction?
I. Online validation routines that check dollar authority limits.
II. Online user access controls.
III. Automated balancing and reconciliation routine.
IV. Edits that validate full completion of data input fields.

Question75: Certificates of deposit may be:

Question76: Following are the examples of illegal sales practice EXCEPT:

Question77: Compliance testing is designed primarily to:

Question78: To the extent that the hedged relationship ceases to be effective, the hedging instrument's gains/losses should be transferred from the reserve and recognized in:

Question79: Demand deposit account allows customers to transfer money through the use of:

Question80: Many group disability income policies contain a physical examination provision that requires a doctor to examine a claimant before the claim is paid. The insurer may also require the claimant to undergo periodic examinations to verify:

Question81: _________ are future economic benefits controlled by an entity.

Question82: The mission of the NAIC is to assist State Insurance regulators, individually and collectively, in serving the public interest and achieving all the following fundamental insurance regulatory goals in a responsive, efficient and cost effective manner, consistent with the wishes of its members EXCEPT:

Question83: Example/s of ongoing monitoring function/s is/are:

Question84: Banks that performs variety of services for other bank, e.g. they make emergency loans to banks that are short of cash and clear cheques that are drawn and paid out by different banks are called:

Question85: All the statements mentioned below are clear and compelling business benefits of a strategic approach to enterprise-wide risk intelligence; EXCEPT:

Question86: Due from bank balances are used to:

Question87: End users need to hedge the prices at which they can purchase these commodities for instance:

Question88: The financial institutions' general ledger records activity on deposit accounts. Posting of time deposit transactions usually occurs on the day transaction occurs or the next day. The following audit objectives and steps should be considered when performing an audit of deposit accounts EXCEPT:

Question89: Which of the following are generally considered to be characteristics of savings deposits?
I. Interest bearing.
II. No stated maturity.
III. Penalty for withdrawal.

Question90: The objective/s of a trust department audit is/ are to:

Question91: A client makes the following statement: "If you make us put property tags and numbers on major equipment, next we will have to put tags on every pen, pencil, and paper clip in the place." This is the argument that if a particular action is taken, it will inevitably lead to another, less desirable action. We may call this:

Question92: Known limitations of VaR methodology include the fact that changes in market may not tend to normal distribution (specifically, that very large movements are more likely than predicated by the normal distribution assumption); BECAUSE:

Question93: Following statements define risk EXCEPT:

Question94: Which of the following are NOT common funding vehicles used by insurers to invest in retirement plan assets as they are accumulated?

Question95: Types of commercial loans are /are:

Question96: Which of the following is NOT the benefit of an endowment insurance policy?

Question97: The types of accounts that bear interest include savings accounts, negotiable orders of withdrawal (NOW) accounts, and certificates of deposit. These interest bearing accounts are known as:

Question98: "Audit management must decide whether to sample (judgment or statistical) or use the entire universe, and which specific quantitative and qualitative methodologies will provide sufficient, competent and relevant evidence to answer the questions posed in the audit objectives." It is an example of:

Question99: While performing consulting services internal auditors should specifically maintain:

Question100: Which of the following should be the next step after the structuring process in order to complete the securitization process?

Question101: Residential loans are usually secured by all EXCEPT:

Question102: It provides additional living expenses when the home is unlivable, so home owners can continue to live comfortably. While the home is made livable, the homeowner policy will pay for items such as rented rooms at a hotel, restaurant meals, and laundry expenses. What is it?

Question103: These occur when two parties trade currencies at a mutually agreed upon exchange rate. One trader calls another trader asking for the price of a particular currency, and the second trader quotes both buying and selling prices for that currency. What are these?

Question104: "A negotiated offering in which a new issue of municipal securities is sold on an agency basis by a placement agent directly to institutional or private investors rather than through an offering to the general investing public" is referred as:

Question105: New Zealand's major trading partners are in the process of adopting or have already adopted, the international's accounting standards this includes all EXCEPT:

Question106: Typically, the costs associated with receiving care from the "in network" or approved providers are
______________ when care is rendered by non-contracting providers.

Question107: The responsibility for preparing and presenting the audited financial statements is that of:

Question108: Employee benefits are generally considered non-wage compensations designed to enhance any employee's salary compensation. However, it should be noted that payroll is one of the largest operating expense in many banks. Losses can occur if a bank does not have adequate controls over this function.
The largest risk/s bank face in this function is/are:

Question109: Which of the following statements about endowments is correct?

Question110: The "discount on bonds payable" account is __________when a bound sells at discount. The "premium on bond payable" is ____________ when a bond sells a premium.

Question111: Office of the comptroller of the currency:

Question112: The tax implications are to be considered in case of life insurance. As, you can take out in chunks to supplement the income, and minimize tax burden, while keeping the majority still under the tax differed status (Not to mention the benefit of Roth IRA).So, the end result of what you have is for disposable income is once again better with the:

Question113: A manufacturer wants to protect the company from financial loss resulting from third-party lawsuits. The manufacturer has learned of several recent jury awards over $7 million for product defects. The manufacturer currently has only $5 million in this type of coverage. The manufacturer has also learned that several automobile claims have been recently awarded against other company's cars in accidents over $1 million. The manufacturer has damaged his competition and the manufacturer wants to protect his company further than the current policy allows. What insurance coverage product will the manufacturer likely buy?

Question114: Audits of foreign exchange transactions may include of the following objectives and tasks EXCEPT:

Question115: Deductibles for dental insurance plans are _________

Question116: Major categories of loans include all of the following EXCEPT:

Question117: Insurance contracts are also considered ____________ in that they are legal documents that required the insurer to pay if covered events occur. Because the insurance company creates the contract, it is liable if there are any ambiguities in the contract language.

Question118: Although generally attached to bonds or preferred stock, warrants can also be attached to other securities, such as speculative stock. Warrants allow holder to buy more stock as its value appreciates. Below are the terms that must be considered in order to understand warrants EXCEPT:

Question119: A financial institution's performance in helping to meet the credit needs of its community is evaluated in context of information about:

Question120: Five internal control components are:

Question121: __________ allows businesses that sell durable goods such as auto-mobiles to finance inventories. As the business sells goods, the loan advance against those goods is repaid.

Question122: Main areas within financial services are:

Question123: Which one of the following statements is NOT the part of audit work schedule?

Question124: _________ stock generally costs more than __________ because of the additional rights its stockholders receive.

Question125: Auditors can use background information to define and modify:

Question126: Major types of individual long-term disability policies are all EXCEPT:

Question127: Asset-based financing involves loans that are secured by the borrower's:

Question128: In case of an annuity with a spread of 3%, if the index gained 9%, the return credited to the annuity would be:

Question129: Interest rate risk arises from differences between the timing of rate changes and the timing of cash flows ( _________ );from changing rate relationships among different yield curves affecting bank activities ( ____________ ); from changing rate relationship across the spectrum of maturities ( ____________ );and from internet-related options embedded in bank products ( _____________ ).
Choose the appropriate set.

Question130: Banks should develop policies related to ALM, including specific guidelines regarding risk/reward tradeoffs.
The goal is to manage risks while achieving acceptable returns on investments. In developing these policies bank officials analyze:

Question131: The most common index funds tries to tracks the S&P 500 by purchasing all 500 stocks using the same percentage as the index. Other indices that mutual funds try to copy include all of the following EXCEPT:

Question132: At the end of the day all funds in a non-interest bearing checking account are cleared out and moved into a short-term investment account overnight. At the beginning of the next day, those funds are put back into the regular account for use that day. Such accounts are called:

Question133: In order to avoid reputation risk; e.g. a bank that originates and sells loans into the secondary market should follow ______________ to protect its reputation in the market to support future loan sales.

Question134: Annuities provide the annuitants with ________________.

Question135: Entrance Conference- The entrance conference may be the auditor's first face-to-face contact with client.
The objective/s of the entrance conference is/are to:

Question136: There are some investment companies, known as exchange-traded funds or ETFS, which are legally classified as open-end companies or UITs. EFTs differ from traditional open-end companies and UITs because:

Question137: All lending institutions assume some loans will not be repaid and thus estimate the losses they expect from their loan portfolio. Management of the lending institution sets a reserve for loan losses at a given point based on factors such as:

Question138: Which one of the annuities, mentioned below, is not regulated by the SEC:

Question139: These are similar to coupon bonds in that ownership is based on possession. These have not been issued for the last couple of decades, however those previously issued will continue to exist until they reach maturity. What are these?

Question140: Mutual funds provide an attractive investment choice because they generally offer the following feature/s:

Question141: Financial institutions regularly identify uncollectible accounts and charge them off against the reserve of:

Question142: Non-deposit investment product includes:

Question143: Which of the following is NOT included in the list of principles for formulating well- stated audit objectives?

Question144: Stock transfer agent, Bond registrar, stock registrar and dividend reinvestments agent are the additional duties of:

Question145: Which one of the following activities is not related to the trust committee activities that should be reviewed?

Question146: Issuance of licenses to insurance agents is one of the responsibilities of:

Question147: Types of barrowed funds include all EXCEPT:

Question148: ____________ are the instruments with maturities of 30 years for new issues (10-to-30-years issues were allowed in the past). The amounts range from $1,000 to $1,000,000 and are sold at auction in a manner similar to that for treasury notes.

Question149: Managed care health techniques are most often practical by organizations and professionals that assume risk for a/an:

Question150: I- With reference to the granting of customer credit lines a thorough analysis of the customer's overall financial position is performed prior to trading authorization.
II-confirmations of each transaction are sent to customers indicating the quantity, delivery month and the contract price to ensure the integrity of transactions.
III-Original margin deposits in cash or acceptable securities to guarantee performance of contracts are determined in accordance These all are adequate procedures and controls associated with:

Question151: Securities products include:
1. Trusts
2. Annuities
3. Derivatives
4. Stocks
5. Bonds
6. Commodities
7. Mutual Funds
8. Pension Funds
9. Term Loans
10. Asset Management
11. Money Market Products

Question152: Leases allow a customer to use an institution's property for a specified period. Most lease agreements give the lessee the option of purchasing the property:

Question153: Engagement client management often has a negative perception of audit process; therefore, communication throughout the audit process is essential to alleviate some of the concerns of management.
The very first step in communicating the audit information with the client is:

Question154: Exception reports generated by the lending institution are designed to identify past-due loans. Auditors should review these exception reports to identify an unusually high number of exceptions and old or unusual exceptions that might indicate that:

Question155: For example, $50,000 five-year policy might decrease to $40,000 in benefits payable the second year, to
$30,000 the third year, to $20,000 the fourth year, and to $10,000 in the final year. This is an example of:

Question156: Trading securities are securities that a bank intends to sell within a short period, usually less than:

Question157: To limit strategic risk management should ensure proper balance between the:

Question158: Which of the following way best defines disability insurance?

Question159: Guaranteed investment contracts are contracts between:

Question160: Considerations for determining required audit resources include:

Question161: Data gathering and evaluation during field work includes:

Question162: "An incoming wire transfer with instruction to pay the beneficiary upon presentment of proper identification.
The beneficiary usually does not maintain a checking or savings account with the paying financial institution." This definition refers to:

Question163: Securities available for resale, by the bank, should be reported at:

Question164: ____________insurance provides a specified benefit amount in either of the following cases:
If the insured survives to the maturity date of the policy is reached.

If the insured dies before the maturity date of the policy is reached.

Question165: Bond yield is the return on a bond. Which of the following terms may apply to bond yields?

Question166: The process of purchasing all or any part of anew issue of municipal securities form the issuer and offering such securities for sale to investors is called:

Question167: Auditors testing mutual funds transactions will typically focus on whether customer purchases and redemptions are accounted properly. In cases where brokers are used to maintain customer accounts, auditors may need to confirm:

Question168: A bond currently priced at $1,250 with a 10% nominal yield of $100 would have a current field of
_____________. The same bond priced at $800 would have a current yield of __________.

Question169: Trust departments provide services to publicly held companies related to issuing and maintaining:

Question170: A statement of cash flows in a financial report that shows incoming and outgoing money during a particular period (often monthly or quarterly). It does not include _________ items such as depreciation. The statement is a useful tool for determining the short-term viability of a company, particularly its ability to pay bills.

Question171: Cash on hand refers to:

Question172: In which of the following ways are calls and put options used by the options investor in purchase and sales transaction?
I. A long call allows the investor to purchase the underlying security at the specified strike price after the option expiration date
II. Along put allows the investor to sell the underlying security at the specified strike price until the option expiration date
III. An investor who is short a call is at the underlying security at the specified strike price if a call option is exercised after the option expiration date
IV. An investor who is short a put is obligated to buy the underlying security at the specified strike price if a put option is exercised by the option expiration date

Question173: Which one of the following Factors does NOT ensure the financial health and security of the organization?

Question174: If a mutual fund has an NAV of $100 million, and investors own $10,000,000 of fund's shares, the funds per share value will be:

Question175: Not all misstatements will be material enough to affect the fair presentation of the financial statement. A material misstatement is one that the auditors determine would change or influence the option of a reasonable person relying on the financial statements for information. Ultimately, auditors must exercise judgment to assess materiality based on the qualitative nature of the misstatements and their quantitative extent. Materiality is also based on auditors' assessment of control risk levels in the organization. The following factors may influence the auditors' assessment of control risk EXCEPT:

Question176: The responsibility of setting an estate includes:

Question177: Internal auditing controls (e.g. segregation of duties, monitoring, reconciliation), management controls (e.g.
the plan, methods and procedures adopted by management to ensure its goals are met, including systems for measuring reporting and monitoring program performance), physical controls (e.g. security), and Information technology control (e.g. access security controls ,data center operation controls). All these are examples of:

Question178: ____________ is a form of insurance, to move risk from someone major loss to someone who could absorb the loss, or is able to hedge against the risk by buying some other derivative.

Question179: Which one of the following is NOT the rule of National Association of Securities Dealers (NASD)?

Question180: Time deposit transactions are recorded in:

Question181: The term umbrella market segmentation is referred to:

Question182: When the maturity date of the annuity arrives, the insurer begins making a series of payment to the annuitant over a stated period (Known as__________).

Question183: The term "thrift institution" is referred to:

Question184: The plans developed for the audit functions should be updated as circumstances dictate. Such specific types of plans include all EXCEPT:

Question185: The primary regulatory entities for banking include all EXCEPT:

Question186: The accounting standards in the United State are:

Question187: The enterprise- wide risk management approach focuses both on familiar financial risks and harder to measure-though equally important:

Question188: ________ are insurance company representatives with the authority to sell the company's product.

Question189: It is a contract that defines corporation and bondholders responsibilities and is designed to protect the right of the bondholders. A trustee (most often a commercial bank) is generally appointed to ensure that the obligations defined in the agreement are of trust indenture must e filled with SEC. What is it?

Question190: Which two of the following characteristics apply to universal life insurance policies?
I. To provide the insured with a number of investment options.
II. To provide the insured with a minimum guaranteed cash value.
III. To provide a cash value fund that accumulates tax deferred.
IV. To provide flexibility of both premium and death benefits.

Question191: All the activities, mentioned below, cause rise in interest rate EXCEPT:

Question192: Which of the following type/s of company/ies is/are defined by Investment company act?

Question193: Which of the following is/ are the responsibility /ies of state insurance commission:

Question194: Hedge funds:

Question195: Both residual and control risk need to be_______________ dealt with in project management.

Question196: Customer accounts:
Ensure that the firm is exercising due diligence in the opening and supervision of customer accounts. The procedures should be formalized in writing and in accordance with the rules and regulations of the appropriate regulatory authority.
Ensure that daily customer positions and option exercises are in accordance with the limits established by the appropriate exchange. Verify that commissions generated by customer trades are properly calculated and posted to the general ledger.

Question197: Basel II aims to improve the security and long-term viability of the financial system by focusing on bank's
____________

Question198: Here are the following major types of long-term disability policies EXCEPT:

Question199: Cash equivalent may include:

Question200: Auditors should be aware of the following control and monitoring activities typically associated with securities lending EXCEPT:

Question201: Which one of the following statements elaborates some insurance products that fall under the regulatory authority of SEC?

Question202: Insurance industry is regulated by:

Question203: I- A gold producers wants to hedge his losses attributable to a fall in the price of gold for his current gold inventory.
II- A cattle farmer wants to hedge his exposure to changes in the price of his livestock.
These are the examples of __________ who need to manage their exposure to fluctuations in the prices of their commodities.

Question204: Deposit accounts are:

Question205: If interest rates fall, a bond issuer may decide to pay off (or "retire") its debt and issue new bonds that pay a lower rate. When this happens, the fund may not be able to reinvest the proceeds in an investment with a high return or yield. This is an example of:

Question206: Risk assessment may be:

Question207: When one party trades a variable interest rate for a fixed interest rate or vice versa then __________ occurs.

Question208: Theory of life insurance is evolved from:

Question209: These are the most common type of municipal bonds and are backed by projected revenue streams from the infrastructure built by the bond. These revenues can be in the form of rental r user fees for facilities or even tolls for road improvements. What are these?

Question210: Which premium life insurance is flexible enough under which policy holder may change the death benefit from time to time?

Question211: Auditors must use professional judgment to determine the impact a risk factor may have on the use off audit resources. Risk can be controlled by various preventive measures such as:

Question212: When a loan becomes delinquent or when collection seems unlikely, banks often suspend:

Question213: The EU saving Directive is aimed at effective taxation of saving income in the form of:

Question214: If a surgeon loses a hand, she may not be able to perform surgery. If she has an ____________ policy, she would be able to recover, even though she can still work as a doctor in a nonsurgical field. If she has a
____________ policy, there would be no recovery, even if the surgeon's only possible alternative is to be a tour guide.

Question215: Some small businesses keep funds in a savings account to gain interest on:

Question216: If more funds than expected are needed to cover loans losses in a given period, the reserve must be increased and the difference is charged to:

Question217: Checking account may pay interest. Checking accounts that pay interest are referred as a:

Question218: COBIT (Control Objectives for Information and Related Technology) is based on existing Information Systems Audit and Control Foundation, control objectives enhanced with existing and emerging international technical, professional, regulatory, and industry-specific standards. COBIT has four domains or high-level classifications. Which is of the following is NOT out of those domains?

Question219: Visa and MasterCard have teamed up to develop payment card Industry ( PCI) Data Security standards to govern the safekeeping of account information. Which of the following is NOT out of the major goals of PCI standards?

Question220: Compliance risk can lead t[o all of the following situations EXCEPT:

Question221: CDs typically require a minimum deposit of at least ________ US, and often require at least ________ US.

Question222: An organization might decide that the risk of fire is high so it will pay a high premium on its fire insurance policy to transfer the risk as much as possible. However, the organization will still have to pay deductible amount on the policy if a fire occurs. This scenario depicts:

Question223: _____________ funds may specialize in a particular industry segment, such as technology or consumer products stocks.

Question224: The extent to which an organization has implemented controls to minimize the actual occurrences of the risk determines the vulnerability to the risk actually occurring, or the
"_______"

Question225: Which of the following situation would not impair audit objectivity?

Question226: Performance as _____________ is normally the only true trust relationship administered by a corporate trust department.

Question227: ___________ help bring performance back into compliance, or address problems that have been identified such as employee grievance system, employee performance approvals, or an administrative appeal's process.

Question228: Historical simulation and model based approach are the methods to calculate:

Question229: There are different classes of mutual funds. Classes that typically do not have a front-end sales load.
Instead they may impose a contingent deferred sales load and a 12b-1 fee (along with other annual expenses) is called:

Question230: "Internal auditors make a balanced assessment of all the relevant circumstances and are not unduly influenced by their own interests or by others in forming judgments." This statement best explains one of the following principles:

Question231: When purchasing a flood insurance policy, there is a standard 30-day waiting period for new applications and endorsements for coverage. Exclusions of flood insurance are all EXCEPT:

Question232: Feasibility studies and cost benefit analysis Approval process for initiating system development and implementation of systems that are developed Change control procedures for new system developments and modifications to existing systems to ensure that only authorized changes are moved to production General and detailed design specification Project review, including periodic milestones reviews and post- implementation reviews Contracting procedures that include the requirements for describing expected project deliverables such as system components and source codes, project timeframes, estimated hours, and the maximum allowable expenses for each phase These are some of the standards of:

Question233: An example of an invalid deductive argument is as follows: Major premises: All employees who are committing fraud drive luxury cars. Minor premises: __________ Conclusion: Therefore, John Doe is committing fraud. What will be the minor premise in this example?

Question234: An objective of an exit conference is that it provides the client management with findings and recommendations identified during the audit which addresses all of the followings EXCEPT:

Question235: Some objectives of an audit related to mutual funds might include determining that:

Question236: The second largest economic area in the world is:

Question237: Some of the countries that do not permit companies to use IAS without a reconciliation to domestic generally accepted accounting principals are all EXCEPT:

Question238: The U.S government is the largest borrower in the world and has a variety of debt instruments. These government obligations or issues are a safe form of debt security, and there has never been a default. The
"full faith and credit of the government" back these issues. Some terms and definitions include:

Question239: Which of the following is least expensive form of life coverage, at least initially?

Question240: Federal Reserve Board has:

Question241: While the SEC review is in progress, the issuer can circulate a preliminary prospectus to determine the interest in issue. The preliminary prospectus must include all of the following EXCEPT.

Question242: Banks also serves as "registrar" for stocks and bond issues. The registrar accounts for all shares issued, certificates outstanding, and Certificates cancelled. The role/s of the registrar is/are:

Question243: Asset/liability management is a planning tool designed to maximize earnings. ALM tries to create optimal risk/reward decisions and focuses on creating prices that achieve a desired spread. A sound ALM policy must manage many types of risks such as:

Question244: Bank may serve as trustee or custodian for pension and profit sharing plans that self- employed individuals establish for them selves and their employees. These types of trust are referred to as:

Question245: The duties of a guardian in guardianship arrangements are similar to those of a trustee.
Specifically, the guardian is obligated to:
1) Protect and preserve the assets
2) Submit an inventory and appraisal to the court
3) Retain or divest assets
4) Use principal and income for the benefit of the ward
5) Submit an annual accounting to the court

Question246: Recent turmoil in the financial markets illustrate the volatility of the secondary market for subprime loans and the significant liquidity risk incurred when originating a large volume of loans intended for:

Question247: Financial institutions regularly identify uncollectible and charge them off against the reserve for loan losses.
Auditors should ensure that the institution has developed adequate criteria for charge-offs and select a sample of charged-off loans whether they are handled properly.
Another useful test is:

Question248: The main purposes of the audit survey are to assist with following goals and tasks EXCEPT:

Question249: _________ insures the real estate loans of borrowers who qualify for the program.

Question250: Insurance in law and economics, is a form of risk management primarily used to:

Question251: Strategic planning is the process of taking a long-term view of the organization, the longer the view, the greater the uncertainty of risks and opportunities. Such reservations can better be handled by:

Question252: Securities available for sale should be reported at current market value. When this type of security has an unrealized gain or loss:

Question253: The risk analysis process involves all of the following steps EXCEPT:

Question254: Which of the following does NOT come under the consideration of systematic or interconnection risk?

Question255: __________ allows businesses that sell durable goods such as automobiles to finance inventories. As the business sells goods, the loan advance against those goods is repaid.

Question256: The purpose of audits of financial statements is to issue an opinion on the fairness of the financial statements and to evaluate all of the following assertions (explicit or implicit) by management EXCEPT:

Question257: CAMEL is an acronym that comes from the key areas of a financial institution's safety and soundness examination. It stands for:

Question258: Commercial banks create money by:

Question259: A sound Asset/Liability management policy must manage following risk EXCEPT:

Question260: There may be instances of massive losses, in case of derivatives, most notably by __________________, these have not had repercussions.

Question261: ___________ have relatively low risks, compared to other mutual funds.

Question262: Trust under will is a term referred to:

Question263: Factor/s that influences/influence the state of an organization's control environment is/are:

Question264: A __________ is a health insurance plan where medical treatment is fully covered if provided by doctor or a hospital belonging to PPO'S network of health care providers.

Question265: A participant's right to receive partial or full benefits under a private retirement plan even if the participant terminates employment prior to retirement is referred to as

Question266: __________ is a tool to transfer qualified investments from one account to another. In order to retain certain special tax treatments, funds may not be co-mingled with other types of assets, including other IRAS.

Question267: Auditors should be aware that the investment objectives of a mutual fund are usually based on a risk profile outlined in the fund prospectus. For example, aggressive growth funds may invest in highly volatile stock issues and a money market fund may invest in lo -risk money market instruments. Other funds have investment objectives based on the type or location of companies they invest in, such as:

Question268: Foreign currency futures contracts may be legitimately traded either on a recognized futures exchange or in the ___________, which generally involves trading between large institutions such as banks and corporations.

Question269: Money market funds:

Question270: All of these are disadvantages of mutual funds EXCEPT:

Question271: Business continuation insurance protects a business against the potential economic loss resulting from the passing or disability of key executives and/or employees. This is the insurance coverage which comes under the umbrella heading of:

Question272: General liability insurance covers the major liability exposure of a business, including lawsuits against an organization's facilities or products. General liability insurance does not cover:

Question273: Purchasers of universal life policies specify the policy's face amount and whether the death benefit will be level or vary as the policy's cash value changes. Under level death benefit policies the death benefit payable:

Question274: Homeowner policies combine property and casualty coverage into the same policy (known as multi-line policies). Homeowner policies provide four types of property coverage. All of the following are out of those EXCEPT:

Question275: Individuals can invest in REITs:

Question276: All members of a group insurance plan (group insureds) are covered under a single contract, known as a master group insurance contract. The employer or entity purchasing the group insurance is known as group policyholder. In _____________, group insureds do not pay any premium for the coverage.

Question277: Most of the group health policies contain a _____________to prevent individuals covered under more than one plan from receiving benefits greater than the expense incurred.

Question278: It is a characteristic of insurance policy according to which the insured decides whether or not to pay the premium to be covered by the policy. If the insured pays the premium, the insurance coma pay is obliged to make payments as stated in the policy. What is it?

Question279: A bank may serve as ___________ for a company's employee benefit and retirement plans.

Question280: Some general criticisms on variable life insurance include all EXCEPT:

Question281: One fund may invest on mostly established "blue chip" (Companies that pay regular dividends). Another fund may invest in newer technology companies that pay no dividends but that may have more potential for growth. These are the examples of:

Question282: Adequate procedures and controls associated with swap transactions should exist to help minimize the risks inherent in transaction process. Example/s of these controls may include:

Question283: ___________ bank balances are bank assets on deposit in other banks.

Question284: Bank loans can generally be classified in several ways EXCEPT:

Question285: Asset Management is the term usually given to describe companies that run manual Funds. The largest are those who provide:

Question286: A residential mortgage-related security that is rated investment grade or is the credit quivalent thereof, or a residential ortgage security that is rated investment grade in one of the wo highest investment grade rating categories. It usually qualifies as:

Question287: Which of the following is not a characteristic of a control environment?

Question288: Which one of the following is an additional duty of trust department?

Question289: In SEC review process, if SEC believes that the registration statement contains false or misleading information or that pertinent information has been omitted, it can suspend the process with______________.

Question290: Option's in major types of life insurance is/are:

Question291: Funds held in trust cannot be reinvented in:

Question292: Policy holders of whole life insurance use the cash dividends in many ways as:

Question293: Regulation D, an SEC rule governing the limited offer and sale of securities without registration under the securities Act of 1933, regulates private placement exemptions. Regulation D supports all of the following EXCEPT:

Question294: Pension plans that an Employer establishes for retired or disabled employees, regardless of whether an employee contributes, are known as:

Question295: Defined benefits & defined contribution plans and individual retirement accounts are commonly administered:

Question296: _____________ is a type of insurance that employers provide for employees. Injured employees must file with the agency that administrates it in their state and notify their employer. It pays: Medical expenses for employees and rehabilitation benefits for employees who become disables through work Death benefits for survivors of employees who die because of an occupational injury or disease

Question297: General Market indices in the commodities market with which many people would be familiar include:

Question298: Commonly used distribution system/s in the insurance industry is/are:

Question299: Whole life policies accrue a cash value that the insurer must surrender to the policyholder if the policy does not remain in force until the policyholder's death. The actual cash value payable to the policyholder in this circumstance would be:

Question300: The European Central Bank is the central bank for the Europe's single currency, the EURO.
The ECB's main task is to maintain the EURO's:

Question301: A gold producer wants to hedge his loses attributable to a fall in the price of gold for his current gold currency. This is an example of:

Question302: If participation rate in an equity indexed entity is 80% and the index increases 9%, the return credited to the annuity would be:

Question303: Overall "market risk" poses the greatest potential danger for investors in ____________.

Question304: The trustee is responsible for producing a schedule of distribution which includes information as:

Question305: An entity that purchases and sells securities on its own behalf is acting as:

Question306: Under the principles of bank accounting, loans reported as non-performing have not yet been charged off as _____________.

Question307: "An element of information, from a transaction to an entire system, is appropriately entered, developed, changed, or used with proper authority." Which of the following element of integrity supports this statement?

Question308: Disadvantages of term life insurance to buyers are all EXCEPT:

Question309: National banks must sell any real estate within _________ of acquisition if it is not used for banking purpose.

Question310: Insurance policies are good for insurance needs, however, as a main investment vehicles, they have considerable downsides.

Question311: Securities are divided into five categories. Type I securities are also known as:

Question312: Recent activities in the marketplace have caused your company to comply with requests from 50 percent of your policyholders to cancel their policies. The company complies and refunds them amounts due. Your audit of this should ensure these refunds were charged against what account?

Question313: ____________ swaps give companies extra flexibility to exploit their comparative advantage in their respective borrowing markets.

Question314: Standards related to information technology are not as well-developed or universally accepted as standards in some other audit areas. Financial statements that are fairly presented meet the following
____________: Generally accepted accounting principles are used Appropriate accounting principles are used Financial statements address matters that may affect their use or interpretation Financial statements classify and summarize information in a reasonable manner Financial statements reflect underlying transactions and events in a way that facilitates the presentation of the financial position, results of operation , and cash flows

Question315: Preferred stock is similar to common stock in that it represents ownership in a corporation.
Preferred stockholders generally receive as fixed dividend rate. The types of preferred stock include all of the following EXCEPT:

Question316: The primary objective/s of ECB is/are:

Question317: Adequate solution for insurance coverage is that:

Question318: Some organizations have information protection policies that place the burden of information protection on managers in individual organizational units. An information protection policy may include:

Question319: The SEC has 20 day__________ to review the materials before registration; however, the period is often longer than 20 days as the SEC may request additional information from the issuer.

Question320: In variable universal life (VUL) policies the maximum premium standard set was:

Question321: Which one of the following is not including in typical type of insurance:

Question322: Which one of the following is NOT an indicator of control weakness in derivatives?

Question323: Endowment policies are similar to___________ policies in that premiums are usually level through the term of policy and the policies build cash values.

Question324: Derivates can be effective low cost tools for managing expose experience losses due to:

Question325: Examples of illegal sales practices may be:

Question326: Financial services organizations are challenged to provide responsible fiduciary management while:

Question327: "These are usually secured by mortgages, deeds of trust, land contracts, or other types of real estate liens.
Interest rates for residential mortgages loans may be fixed or variable. Repayments of principal may be set up for full amortization, negative amortization, or partial amortization with a balloon payment at a specified rate." What are these?

Question328: When a bank charges off a loan as a loss, it reduces an account called the"_____________"

Question329: Letters of credit are also known as:

Question330: Underwriting decisions are more influenced by what underwriters think they can sell to the public than
_____________.

Question331: Some organizations will strive to simply with the law; others will use the Act as an opportunity to further promote treasury best practices. Specific areas of opportunity include all of the following EXCEPT:

Question332: A less satisfactory option in dental insurance is the:

Question333: As interest rate change, the price of an issued bond also changes. The change in price has an inverse relationship to changes in interest rates (if one rises, the other falls). If new bond issues are paying a higher interest rate than existing bonds, investors will not purchase existing bonds unless:

Question334: A contract whereby one undertakes to indemnify another or pay a specified amount upon determinable contingencies is called:

Question335: In utilization management, utilization reviews begin with a preadmission certification. In such situations, insureds must make notification within 48 hours of admission or face reduced or lost benefits. Utilization reviewers monitor the appropriateness of care while a patient is hospitalized. This is known as:

Question336: Off-balance-sheet usually means an asset or debt or financing activity not on the company's balance sheet. It could involve a lease or a separate subsidiary or a contingent liability such as
___________.

Question337: A health services delivery organization that offers the option to its members to choose to receive a service from participating or a non-participating provider. Which one of the best suits to this definition?

Question338: For refinancing home and mortgage loans for example, the underwriter may request additional documentation such as:

Question339: The primary mechanism for estimating potential losses is mathematical methodology, value at risk ("VaR") which estimates the exposure to market risk:

Question340: Close-end funds:

Question341: The actual amount of payment the annuitant pays is based on:

Question342: The Federal Reserve System interacts with foreign central banks include:

Question343: If investment returns are very poor, this could lead to:

Question344: The auditor should plan an audit with an attitude of:

Question345: Shareholders also have the right to receive declared dividends. Besides the potential for capital appreciation, investors also have the potential to receive dividend income. There are several types of dividends. For instance, an investor with 500 shares of stock selling at $50 per share would have 1,000 shares at $25 per share after a 2-for-1 split. These types of dividends are called:

Question346: Which of the following is NOT the requirement of Exempt Securities Act?

Question347: Whole life policies offer lifetime coverage at a level premium rate that does not increase as the insured ages. Whole life policies are classified in all of the below mentioned categories EXCEPT:

Question348: It should be an immediate decision:

Question349: Default risk is an alternate term used for:

Question350: Which of the following are duties of insurance commissioners in regulating insurers?
I. Rule of the constitutionality of insurance law.
II. Determine if an insurer meets the requirements to obtain a license.
III. Render decisions on the meaning of policy terms.
IV. Conduct financial investigations of insurers operating in the state.

Question351: All of the following are financial instrument EXCEPT:

Question352: Faulty human judgments, misunderstanding of instructions, errors, management override, and collusion and cost/benefit considerations are the limitations of:

Question353: Which one of the following audit objectives and steps should not be considered when performing an audit of deposit account?

Question354: Which of the following is/are included in the specific steps for auditing short-term investments?

Question355: I- Restrict access to data by business need-to-know

II- Assign Unique ID t each person with computer access

III-Restrict physical access to cardholder data

The above requirements of PCI (Payment Card Industry) achieve which one of the following goals?

Question356: Unlike trust, there is no conveyance of title to the account assets. When the ________ relationship is established; legal title to the property remains with the principal.

Question357: Charitable trust that is an irrevocable trust and that may be testamentary or inter-vivos (Between living persons) is called:

Question358: To server as family and/or financial planning tool

To provide for retirement

To obtain favorable tax treatment

These are the primary reasons

Question359: Obtaining feedback from client management throughout the audit is encouraged in order to ensure that appropriate information is being obtained and to alleviate problems at the conclusions of the audit. Some specific components of continual communication to consider include:

Question360: The federal open market committee (FOMC) board sets reserve requirements and shares the responsibility with the reserve banks for:

Question361: Which of the following statements about the over-the-counter market is false?

Question362: A derivative with a convex payoff-profile at some point before the option's maturity is a simple plan vanilla option. As the option becomes progressively more-in-the money, the rate at which the position makes money increases until a sympathetically approaches the linear payoff of the future. Similarly, as the option becomes progressively more out-of - the money, the rate at which the position loses money decreases until that rate becomes zero. This is an example of:

Question363: Options are quoted daily in the newspapers. The listing provides the name of the underlying stock and:

Question364: The balance sheet is the fundamental report of a company's financial position. An examination of a balance sheet will assist in determining:

Question365: These are used to speculate on the direction of interest rates. The trading of these contracts is limited. The future market is the main trading market for securities based on interest-rate movements. What are these?

Question366: Derivatives can be:

Question367: "Insurers guarantee a minimum rate of interest dunning the time that the account is growing and periodic payment amounts of a specified amount for a stated period (either specific period 10 years indefinite period etc)." This statement is related to:

Question368: The entity has comprehensive, written credit risk management policies and procedures for derivative activities. This addresses to:

Question369: When looking at account receivables auditors should ensure:

Question370: System tailoring is accomplished by setting optional system parameters and, therefore, has an impact on system performance and security. Control techniques for system's software include:

Question371: Which one of the following does NOT depicts a common indexing method?

Question372: __________ agency system uses agents who sell the policies of a group of affiliated companies.

Question373: Following are the EU Saving Directives paying agents EXCEPT:

Question374: Carefully crafted audit objectives are important BECAUSE:

Question375: Electronic financial services audits should focus on whether there are adequate internal controls in place to protect customer transactions information, and assets. Some key steps in clued all of the following EXCEPT:

Question376: The interagency statement calls for these disclosures to be provided EXCEPT:

Question377: A mutual fund that invested primarily in utility companies and bonds would be an example for an income mutual fund. Which of the following risk/s is/are NOT associated with bond funds?

Question378: The main objective/s of an audit of swaps is/are:

Question379: Life insurance policy in which two people are covered on one policy is called:

Question380: Enterprise risk management encompasses all EXCEPT:

Question381: The administration of personal trust accounts is primarily controlled by all of the following EXCEPT:

Question382: Once the underwriter has reviewed all of the file documentation provided, he or she will be issued a written decision .The decision may be one of the following:

Question383: A sound data classification scheme sets the foundation for the effective implementation of access control to ensure that data is adequately protected. The elements of a data classification scheme are as follows EXCEPT:

Question384: In which of the following ways would the writer of an uncovered call usually make a profit?
I. The call expires
II. The underlying stock splits
III. The underlying stock goes up in price
IV. The underlying Stock goes down in price

Question385: Initially, back-office operation were created as captives of parent companies and treated as cost centers from cost centers to profit centers due to:

Question386: Back-office operations are _____________ as offshore operations which establish business entities in tax- free export zones or offshore centers.

Question387: Which one of the following is/are NOT the type of retirement plans that banks may administer?

Question388: The fund prospectus is the document that provides a general overview and description of the fund. The intent is to provide a potential investor with enough information to make a sound financial decision. The following information is generally placed in a prospectus EXCEPT:

Question389: The major benefit of risk assessment is:

Question390: The risks associated with operating objectives include all of the following EXCEPT:

Question391: Agents that represent one company exclusively are called:

Question392: Following is a list of background items auditors should review to determine their impact on audit objectives EXCEPT:

Question393: The primary regulatory entities of banking industry include:

Question394: Risks inherent in the management process are known as:

Question395: Close-end funds are traded on:

Question396: Which one of the following is an internal control component?

Question397: Internal auditors, engaging in activities that are illegal and discreditable to the profession of internal auditing or the organization, violate which of the following principles:

Question398: Insurance products yield _________ compared to regular investment option and this is besides the added incentives (read bonuses) offered by insurers.

Question399: Selectively increasing the price of a mortgages loan above the bank's established rate to certain customers ("overages") may have the effect of discriminating against those customers .This practice left undetected and not properly controlled may raise the possibility of:

Question400: Banks can record interest earned on trading securities as either interest income or trading income.
However, the recommended method is:

Question401: When one buys a cash instrument, for example 100 shares of ABC Inc., the payoff is linear (disregarding the impact of dividends). If share are purchased at $50 and the price appreciated to $75, we have
________ on a mark-to-mark basis.

Question402: Internal audit routinely reviews compliance risk and also should be reviewing business risk. The efforts to control both risk types will purely enhance:

Question403: Deposit accounts are either interest bearing or non-interest bearing. Interest bearing accounts includes
_________ and ___________. The types of accounts bear interest for a fixed period of time and are known as time deposits.

Question404: Most certificates are held by the depository trust company as custodians for the trustee for the benefit of the certificate holders, and the notice of book entry is made to the certificate holders simultaneously with the distribution. The actual certificates, but instead only possess a record of ___________.

Question405: Some wills specify that more than one responsible party share the trustee's responsibilities of an estate
.The condition depicts relation with which one of the following trust services:

Question406: There are multiple sets of attribute and performance standards:

Question407: Risks associated with compliance with laws and regulations may actually _________ impact ________ in
________. Choose the correct set.

Question408: Money market funds bond funds (also called "fixed income" funds) , and stock funds (also called equity funds) are the categories of:

Question409: Management of the lending institution sets a reserve for loan losses at a given point based on such factors as mentioned below EXCEPT:

Question410: Following elements should be documented in the audit scope EXCEPT:

Question411: Some specific requirements of securities and exchange 1934 Act are:

Question412: The scope of an audit defines the boundaries of the audit by addressing such items as the audit period or number of locations to be reviewed.. Some important considerations when defining the scope of an audit include:

Question413: If principal is paid on a loan after it has been placed on non-accrual status, the bank must determine whether it should record the payment as a reduction of:

Question414: Nature of internal audit activities and quality criteria against which the performance of these services can be evaluated is best portrayed by:

Question415: A special servicer is the servicer who assumes servicing responsibilities when a loan goes into default and conducts the work-out "or foreclosure process. There are various scenarios typical for determining special servicers; as mentioned below, EXCEPT:

Question416: Universal life policies are a form of permanent life insurance that has flexible premiums, flexible face amounts, and separate pricing for the three major pricing categories. Which of the following is/are out of those categories?

Question417: All of the following phrases are used to express the auditor's opinion EXCEPT:

Question418: Which of the following best suits in place of question mark?

Question419: The benefits of tax deferral will out weigh the costs of a variable annuity only if the investor holds it as:

Question420: Liability insurance is a part of general insurance system of _________.

Question421: Notes are debt instruments issued to:

Question422: An index method that credits index-linked interest based on any increase in index value from the index level at the beginning of the contract's term to the highest index value at various points during the contract's term is called:

Question423: Organization's Objectives are described in three general categories:

Question424: Corporations, government entities and other organizations use banks as trustee to handle the
______________function associated with a stock or bond issue.

Question425: The approximate per-share NAV plus any fees the fund imposes is the price:

Question426: How many member states of the European Union are participating in the single Euro Currency?

Question427: _____________ loans allow the consumer to repay a loan over a set period. They require periodic principal and interest payments The loan is generally secured by the item being purchased. Automobile loans or real estate mortgage loans are common types of such types of loans.

Question428: Both veteran affairs department and the Federal Housing Administration require an appraisal by a certified or licensed real estate appraiser for transaction valued at:

Question429: Which of the following activity/ies should be considered by the auditors whenever reviewing situations where broker-dealer finance proprietary or customer activity through collateralized bank loans?

Question430: Cash surrender life insurance is referred to:

Question431: Information technology general controls set the foundation for effective control over computerized information system assets. General controls apply to the entire computer operation. Which of the following is/are NOT out of these controls?

Question432: Securities lending refers to the practice of temporarily transferring securities to a borrower with the intent that the lender will buy them back at a future date. The borrower is required to return the securities to the lender, either on demand or at a specified time. A major reason for securities lending is:

Question433: Reasonable assurance relates to the:

Question434: Occasionally, a company will issue additional shares of its stocks, called ____________, to raise additional capital.

Question435: A major type of personal selling distribution system is the:

Question436: The benefits of an endowment insurance policy include all of the statements mentioned below EXCEPT:

Question437: Insurance companies assist individuals in managing personal risk through risk pooling. Risk pooling is based on fact that the probability of any one type of loss occurring for a given individual is small. Therefore insurers can insure:

Question438: ECB performs all these tasks EXCEPT:

Question439: Which one of the following generally pays higher rates of interest than saving accounts?

Question440: An area of FOMC board responsibilities is the development and administration of regulation that implement major federal laws governing consumer credit, such as:

Question441: The Federal Reserve issue oral or written statement to encourage banks to increase or decrease their lending activities. This is a condition of:

Question442: ______________ includes provision provided by issuers to reduce risk in CMBS in a securitized process.

Question443: Site Selection Rationale

Client officials client/requesters for audit results

Scope limitations encountered or anticipated

Expert advice

The above elements should be documented in the:

Question444: Although these rights do not always exist, if they do, shareholders are entitled to buy any new issue of stock in proportion to their holdings. If a person owns 5% of a corporation, then he or she would have the right to buy 5% of newly issued shares. These are:

Question445: Which one of the following is common misinterpretation during the calculation of VaR

Question446: Non-interest bearing accounts including checking accounts and escrow accounts are known as:

Question447: Investors typically cannot ascertain the exact makeup of a fund's portfolio at any given time, nor can they directly influence which securities the fund manager buys and sells or the timing of those trades. This is because of _______ in mutual funds.

Question448: The reliability (competence) of evidence gathered by auditors is a __________. The reliability of evidence is a key factor in the audit analysis. Relevance is also a key factor in determining the quality of evidence.

Question449: When conducting an audit of securities investments, the following objectives and audit steps should be considered EXCEPT:

Question450: IF a securitization transaction meets FAS 125 sale or servicing criteria, the seller must recognize any gain or loss on the sale of the pool immediately and carry any retained interests in the assets sold ( including servicing rights/obligation and interest-only strips) at ____________.

Question451: In effect to protect customers from unsubstantiated or undocumented losses. NASD has some specific rules. The rules include:

Question452: Major types of Real Estate Investment Trust (REITs) include all of the following EXCEPT:

Question453: Group permanent life insurance often used:

Question454: Which one of the following dominates the banking industry?

Question455: A commercial or consumer loan made to foreign branch of a large bank is also considered as:

Question456: ___________ are investment securities that do not fall under one of the other types of securities.
Examples of these are Type III securities including corporate bonds and municipal bonds.

Question457: Banks provide the following personal trust service/services for the individuals:

Question458: Asset/Liability (ALM) is a short and long term planning tool designed to maximize earnings. ALM tries to create optimal risk/reward decisions and focuses on creating prices that achieve spread. A sound ALM policy must manage following types of risks EXCEPT:

Question459: Internal auditing:

Question460: In variable life insurance the number and type of insurance choice available are dependent on insurer, but some policies are available with a wide variety of separate accounts also known as:

Question461: During the posting process of ledger records on deposit account banks may reject some transactions because:

Question462: Most corporations have an annual meeting where stockholders have the opportunity to vote on important issues. These issues include:

Question463: Many businesses generally find CDs to be a:

Question464: A trust agreement is called:

Question465: Standard and poor's 500 index, the Dow Jones Industrial average, or the Toronto stock Exchange index is the examples of:

Question466: Hospitals document reserves as that portion of the accounts receivables that they hope to collect but have some doubt about its collectability. Rather than book these amounts as income, hospitals will
"____________" These amounts until paid.

Question467: Relief from administrative details and continuity are the major reasons for:

Question468: Which one of the following questions is NOT considered when claims department review the claims?

Question469: I- Loan Processing
II- Claims Processing
III- Applicating
IV- Credit and Collection
V- Reconciliations
VI- Account Payments
VIII- Time and Expense Reimbursement
IX- Vendor Payments
X- Payroll
These all are the services included in:

Question470: Pension Benefit Guarantee Corporation (PBGC) insures "Defined benefit plan", so employees assume
_____________ for any option they contribute.

Question471: Notes and bonds are long-term debt instruments. Long-term debt instruments are sold at ______________ when the market rate _____________ the stated interest rate.

Question472: Banks should account for trading securities at market value. Any changes in cost should be regarded as a/ an:

Question473: At times when you have more money available, you can pay as if it were a whole life policy and accumulate cash value on a tax deferred basis. It is the advantage of:

Question474: ____________ is an electronic payment network used by individuals businesses, financial institutions and government organizations. It provide better cash management capabilities and lower costs than traditional paper payments.

Question475: Term Life insurance is available in which of the following variant?

Question476: Under the interagency statement when a bank recommends or sells non-deposit investment product it should inform the customer that the product is:

Question477: __________pays damaged insured by the injured and the insured's passenger when injured in an auto accident caused by a motorist without liability insurance. The coverage also covers accidents caused by hit-and-run drivers.

Question478: Variable life insurance is:

Question479: Continuous auditing is a method used to automatically perform control and risk assessment more frequently. Technology is the key to enable such an approach. Continuous auditing changes the audit paradigm from periodic reviews of a sample to ongoing audit testing of ______ percent of transactions.

Question480: Which of the following is not an audit objective of a commodity department?

Question481: Audit evidence:

Question482: The companies strive to improve customer acquisition, services and retention through the use of following methods EXCEPT:

Question483: Auditors define audit objectives based on information gained:

Question484: For Example one exception in 1000 cases is probably not the reason enough to recommend overhauling the entire system, although the final answer must be derived from the context and the condition of the related control system. Which one of the following statements is clearly supported by this example?

Question485: This agreement occurs when a security is sold with an agreement to buy it back. The repurchase date is usually very short term, often one day. Dealers sell a portion of their securities to entities with cash reserves and agree to buy them back for the principal plus interest. What is this?

Question486: A firm is trying to acquire another company. This is called ____________, and all the participants involved must register with the SEC.

Question487: Basel Accord II's addition to key factors that an organization encounters is: