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Certified Financial Services Auditor (IIA-CFSA)
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Money market funds bond funds (also called “fixed income” funds) , and stock funds (also called equity funds) are the categories of:
Mutual funds
Professionally managed portfolio
Hedge funds
None of these
have relatively low risks, compared to other mutual funds.
Stock funds
Hedge funds
Money funds
Both B and C
Money market funds:
Can invest in only certain high-quality, short-term investments issued by Federal State and local government
Try to keep their NAV at a stable $1.00 per share
Pay dividends that generally reflect short-term interest rates
All of these
Some of the risks associated with bond funds are all of the following EXCEPT:
Credit Risk
Interest Rate Risk
Payment Risk
Liquidity Risk
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:
Credit risk in bond funds
Prepayment risk in bond funds
Interest rate risk in bond funds
All of these
Overall “market risk” poses the greatest potential danger for investors in .
Bonds funds
Hedge funds
Stock funds
Growth funds
funds may specialize in a particular industry segment, such as technology or consumer products stocks.
Index
Sector
Growth
Income
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:
Class A
Class B
Class C
Both B&C
Hedge funds:
Seek to profit in all kinds of markets by pursuing leveraging and other speculative investment practices
Are subject to very few regulatory controls
Also have voluntarily restricted investment to wealthy investors through high investment minimums (e.g. $1 million)
All of these
Some objectives of an audit related to mutual funds might include determining that:
Mutual fund checks are issued in accordance with firm policies and supported by valid trades
Mutual fund purchases are confirmed on a timely basis
Mutual fund switches are not authorized by the client
All EXCEPT “C”
Major types of Real Estate Investment Trust (REITs) include all of the following EXCEPT:
Equity REITs
Mortgages REITs
Hybrid REITs
None of these
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:
Management’s awareness or lack of awareness of applicable laws and regulations
Client policy regarding such matters as acceptable operating practices and codes of conduct
Assignment of responsibility and delegation of authority to deal with such matters as organizational goals and objectives, operating functions, and regulatory requirements
None of these
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