The auditor should obtain a sufficient understanding by performing risk assessment procedures to:

Determine whether design of controls have been implemented

Evaluate the design of controls not relevant to audit of financial statement

Determine whether design of controls have been implemented

Which control includes the procedures for system design, including the acquisition of software packages, should encourage active participation by the accounting department and internal auditors?

Organizations and operations control

Final approval should be obtained prior to placing a new system into operation is the activity that can be fall into which control?

Organizations and operations control

Which are the types of misstatements relevant to the auditor's consideration of fraud in a financial statement audit?

Misstatements arising from fraudulent financial reporting

Misstatements arising from misappropriations of assets

The auditor responds to risks of material misstatements due to fraud in which of the following ways?

A response that has an overall effect on how the audit is conducted

A response to identified risks involving the nature, timing and extent of auditing procedures to be performed

a response involving the performance of certain procedures to further address the risk of material misstatement due to fraud involving management override of controls

The Module Rule requires the insurer to provide:

To the insurance commissioner of the state of domicile, a copy of notification of adverse financial condition

To the auditor, evidence that the notification has been provided to the organization

Short-term portfolios are:

Portfolios consisting of assets with maturities of less than one year to meet liquidity needs.

Portfolios consisting of liabilities with maturities of one year to meet dollar needs.

Portfolios consisting of combined revenues of less than one year to meet liquidity needs.

Portfolios consisting of assets with maturities of less than one year to meet liquidity needs.

Portfolios consisting of expenses with maturities of less than or equal to one year to meet dollar needs.

A life insurer is subject to an investment income tax of 15 percent on its 'net Canadian life investment income

A life insurer is subject to an investment income tax of 25 percent on its 'net Canadian life investment income

A life insurer is subject to an investment income tax of 35 percent on its 'net Canadian life investment income

A life insurer is subject to an investment income tax of 45 percent on its 'net Canadian life investment income

An investment is the current commitment of dollars for a period of time in order to derive future payments that will compensate the investor for:

The time the funds are committed

The expected rate of inflation during this time period

The uncertainty of future payments

The process of managing a portfolio never stops. Once the funds are initially invested according to the plan, the real work begins in:

Evaluating the portfolio's performance

Updating the portfolio based on changes

Examining current and projected financial goals

The investor's objectives are his or her investment goals expressed in terms of both risk and returns. The relationship between risk and returns requires that goals not be expressed only interms of returns. Expressing goals only in terms of returns can lead to:

Inappropriate investment practices by the portfolio manager

Risk tolerance is more than a function of an individual's psychological makeup; it is affected by other factors such as:

Person's current insurance coverage and cash reserves

An individual's family situation (for example, marital status and the number and ages of children) and by his or her age

Person's current insurance coverage and cash reserves

An individual's family situation (for example, marital status and the number and ages of children) and by his or her age

Person's current assets at a specified time period

Assume our typical 65-year-old investor likewise has adequate insurance coverage and a cash reserve. Let's also assume she is retiring this year. This individual will want less risk xposure than the 25-year-old investor, because her earning power from employment will soon be nding; she will not be able to recover any investment losses by saving more out of her paycheck. Depending on her income from social security and a pension plan, she may need some current income from her retirement portfolio to meet living expenses. Given that she can be expected to live an average of another 20 years, she will need protection against inflation. A risk-averse investor will choose:

A combination of current income and capital preservation strategy

A combination of current income and capital depreciation in an attempt to have principal growth outpace inflation

A combination of current income and capital preservation strategy

A combination of current income and capital appreciation in an attempt to have principal growth outpace inflation

A combination of current income and total return in an attempt to have principal growth outpace inflation

Assume our typical 65-year-old investor likewise has adequate insurance coverage and a cash reserve. Let's also assume she is retiring this year. This individual will want less risk xposure than the 25-year-old investor, because her earning power from employment will soon be ending; she will not be able to recover any investment losses by saving more out of her paycheck. Depending on her income from social security and a pension plan, she may need some current income from her retirement portfolio to meet living expenses. Given that she can be expected to live an average of another 20 years, she will need protection against inflation. A risk-averse investor will choose a combination of current income and capital preservation strategy; a more risk-tolerant investor will choose:

A combination of current income and total return in an attempt to have principal growth outpace inflation

A combination of current income and capital depreciation in an attempt to have principal growth outpace inflation

A combination of current income and capital preservation strategy

A combination of current income and capital appreciation in an attempt to have principal growth outpace inflation

A combination of current income and total return in an attempt to have principal growth outpace inflation

Which of the following is not the correct technical indicator?

Moving Average Convergence/Divergence

Buying power of an investor is calculated as:

Current assets-current liabilities

Which of the following promotes education and ethical behavior among those involved ininvestment business?

Licensed international financial analyst

Securities investor protection corporation

Licensed international financial analyst

Chartered financial analyst institute

Securities and exchange commission

ABA CTFA Practice Test 13 - Free Online Exam Prep & Questions

The operating ratio is the combined ratio less than the ratio of investment income, to earned premiums.

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