IIA-CFSA Exam Questions

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

Stockholders are generally allowed one vote per share held. As a result, individuals who hold large blocks of share are more likely to be board members. Which of the following are...

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...

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...

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 generally costs more than __________ because of the additional rights its stockholders receive.

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 it...

___________ 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...

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 o...

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 inte...

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

Options are quoted daily in the newspapers. The listing provides the name of the underlying stock and its closing price that day, the strike price of the option, the closing prices...

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 d...

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

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

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

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

Notes and bonds are long-term debt instruments. Long-term debt instruments are sold at

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...

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

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

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 gene...

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

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 ha...

____________ 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 so...

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 de...

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...

Negotiable certificates are:

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...

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 inves...

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 th...

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 m...

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

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.

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 fu...

___________ 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 f...

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 secur...

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 so...

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 cu...

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 lar...

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...

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

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.

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 t...

_____________ 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 employe...

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...

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

Which of the following activity/ies should be considered by the auditors whenever reviewing situations where broker-dealer finance proprietary or customer activity through collater...

Reviewing counterparties for creditworthiness and obtaining master trade agreements and credit approval for counterparties before entering into a repurchase or reverse repurchase a...

"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,...