IIA IIA Certifications IIA-CFSA Questions & Answers

• Question 341:

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

  A. It is reported on balance sheet

  B. It is reported on income statement

  C. It is not reported on income statement

  D. It is reported on cash flow statement

  Correct Answer: C

• Question 342:

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

  A. Determine whether policies, procedures, practices, and internal controls over security investments are adequate and being followed

  B. Determine whether transactions are properly authorized and recorded. Verify that dividend or interest income is accurately calculated and recorded in the general ledger

  C. Determine that the institution has an adequate process for reconciling subsidiary records to the general ledger on a regular basis

  D. Determine whether the institution adequately control and records the sold securities in balance sheet

  Correct Answer: D

• Question 343:

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

  A. To report interest income separately from trading income if the amount is material

  B. To report interest income with trading income if the amount is material

  C. To report interest income separately from trading income if the amount is not material

  D. To report interest income with trading income if the amount is not material

  Correct Answer: A

• Question 344:

  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.

  A. Market closing date

  B. Settlement date

  C. A day before the closing date

  D. None of these

  Correct Answer: B

• Question 345:

  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(premiums) of the 3 call and 3 put contracts trading closest to expiration. Listings can be divided into categories. Which of the following is/are out of those categories?

  A. Option Class

  B. Option Series

  C. Option Statuses

  D. Option Lists

  Correct Answer: AB

• Question 346:

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

  A. Its closing price that day

  B. The strike price of the option

  C. Its closing price that day, the strike price of the option, the closing prices(premiums) of thecall and 3 put contracts trading closest to expiration

  D. The closing prices (premiums) of the 3 call and 3 put contracts trading closest to expiration

  Correct Answer: C

• Question 347:

  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?

  A. Put Options

  B. Call Options

  C. Interest rate options

  D. Index options

  Correct Answer: C

• Question 348:

  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:

  A. Type II Securities

  B. Type III Securities

  C. Type I Securities

  D. Type IV Securities

  Correct Answer: D

• Question 349:

  ___________ 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.

  A. Type II Securities

  B. Type III Securities

  C. Type I Securities

  D. Type IV Securities

  Correct Answer: A

• Question 350:

  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:

  A. Warrants are generally attached to a bond or preferred stock and carry the right to purchase common stock at a fixed price

  B. Detached warrants can be traded and have their own value based on the current market andexercise prices. If a warrant is not detachable, it has no individual market value

  C. Warrants typically expire after a number of years

  D. When exercised, a warrant is relinquished in return for shares of common stock at the current market price

  Correct Answer: D