An asset (Set that is purchased with the expectation that it will proor appreciateat sTuture.BondsitInvestment2. Hiseit in stockean organization that brings together money from various people and investske bonus or omer assets.Hurance ComSIONleB. DepositPSIHMarket AAAe liquidity.AVB:4. It is a form of security that indicates the holder has proportionate ownership in the issuingcorporation.A. BondC. DepositD. InvestmentB. Stock5. An income based on the outstanding principal and current interest rate.A. Active incomeC. Passive incomeB. Interest incomeD. Dividend income6. It is a fixed-income instrument that signifies a loan made by an investor to a borrower(typically corporate or government).A. BondB. StockC. DepositD. Investment7. These investments are impractical to invest directly considering storage, transportation,and insurance costs involved.A. CurrencyC. CommoditiesD. InvestmentB. Stock8. A risk management technique that combines a wide variety of investments within aportfolio to reduce risk.A. Risk retentionC. Market TradingD. DiversificationB. Risk control9. A contract (policy) in which an insurer compensates another against losses from specificcontingencies or dangers.A. CommoditiesC. InsuranceD. Mutual FundB. Deposit10. Money, which is in the form of paper or coins that is usually issued by a governmentand generally accepted at its face value as a method of payment.C. DepositA. CurrencyB. StockD. Investment

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Answered: 4. It is a form of security that…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 28RQSC

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Please answer in CAPITAL LETTER IF IT IS AN INFLOW(I )OR AN OUTFLOW (O)COLUMN 1 , AND COLUMN 2 , IF IT CORRESPONDS TO OPERATINGCASHFLOW(OC),INVESTMENT ACTIVITY CASHFLOW(IC), FINANCING ACTIVITY CASHFLOW ( FC)Example: Reduce marketable securities : I OC ( "I" or "O") AND ("OC", "IC" o "FC" )Activity INFLOW " I" orOutflow "O" OPERATINGCASHFLOW(OC), INVESTMENTACTIVITY CASHFLOW(IC), FINANCINGACTIVITY CASHFLOW ( FC) 1. Purchase of treasurystock2. Purchase of availablefor sale investment 3. Sale of equipment at aloss 4. Increase in accountspayable 5. Retirement of bonds 6. Issuance of bonds 7. Decrease in accountspayable 8. Increase in inventory9. Loan from bank bysigning a note 10. Increase in accountsreceivable 11. Purchase of equipmentby issuing a note 12. Purchase of land andbuilding. 13. Decrease in accountsreceivable.14. Payment of dividends. 15.…
Marketable securities or cash equivalents (Choose the INCORRECT statement) a) are acquired with the purpose of being converted to cashb) are long term financial investmentsc) can be easily converted to cashd) are temporary investments
1. When a company purchases another company's bonds as an investment, an account called investments- XXXX is used. What type of an account and normal balance does this investment account have? a. Asset with a debit balance b. Asset with a credit balance c. liability with a debit balance d. liability with a credit balance 2. What does the word accrued mean when talking about accrued interest? a. The interest has not been earned, but it has been received b. The interest has been earned, but it has not been received c. The interest has not been earned nor received d. The interest is being deferred
Strong) (a. investment banking b. an insurance firm c. commercial banking d. mutual fund ) is a transformer of short term asset to long/medium term liabilities. a b c d
(a. investment banking b. insurance firms c. commercial banking d. mutual fund e. pension fund) is a transformer of short term liabilities to long term assets. e d b c a
Select the description that best fits each term or phrase. A. Records and tracks the bondholders’ names. B. Is unsecured; backed only by the issuer’s credit standing. C. Has varying maturity dates for amounts owed. D. The legal contract between the issuer and the bondholders. E. Can be exchanged for shares of the issuer’s stock. F. Is unregistered; interest is paid to whoever possesses them. G. Maintains a separate asset account from which bondholders are paid at maturity. H. Pledges specific assets of the issuer as collateral. 1. Registered bond 5. Convertible bond 2. Serial bond 6. Bond indenture 3. Secured bond 7. Sinking fund bond 4. Bearer bond 8. Debenture
Which of the following is a financial instrument? Select one: a. Merchant bankers b. Leasing Companies c. All the options d. Bonds e. Mutual Fund Companies
An investment vehicle, the investee, is created and financed with a debt instrument held by a debt investor and equity instruments held by some other investors. The equity tranche is designed to absorb the first losses and to receive any residual return from the investee. One of the equity investors who hold 30% ofthe equity is also the asset manager. The investee uses its proceeds to purchase a portfolio of financial assets; thus, exposing them to the credit risk associated with the possible default of principal and interest payments of the assets. The transaction is marketed to the debt investor as an investment. Such investment has minimal exposure to the credit risk associated with the possible default of the assets in the portfolio. It is because of the nature of the assets and of the equity tranche.The returns of the investee are significantly affected by the management of the investee’s asset portfolio. Managing the asset portfolio includes decisions about the selection,…
Asset management includes:A. using money market instruments to cover liquidityB. using cash reserves to cover liquidityC. borrowing fed funds to cover liquidityD. a and b
Trading securities, by definition, are properly classified in the statement of financial position as: Select one: O a. Shareholders' equity O b. Other assets O c. Intangibles O d. Current assets
The statement of cash flows reports the cash proceeds from issuing a bond as a cash flow from Select one: a. Investing activities. b. Asset activities. c. Operating activities. d. Financing activities. The primary advantage of making investment decisions based on the net present value method, instead of the payback period, is that the net present value method Select one: a. Considers depreciation expense as part of the investment’s cash flows. b. Is easier to compute then the payback period. c. Conforms to generally accepted accounting principles. d. Factors the time value of money in its calculations. A firm with an investment opportunity whose internal rate of return was lower than its cost of capital would Select one: a. Use the payback period method to make the investment decision. b. Possibly make the investment. c. Make the investment. d. Not make the investment.
In the context of the different types of securities for investment, match each sentence to the correct type of security. * Bonds Stocks Mutual funds Exchange-Traded Funds (ETFs) Real estate Alternative and complex products Collectibles A financial company receives money from different investors and invests the money in the financial markets, providing professional management, diversification, affordability, and liquidity. Pooled investment funds that offer an investor an interest in a professionaly managed and diversified portfolio of investments, and their shares are traded on stock exchanges. Securities representing a loan an investor makes to the issuer in exchange for interest payments and the repayment of principal at its maturity date. Investments in assets such as rare coins, works of art, old stamps, paintings, that appeal to collectors and investors. Securities that represent ownership in a company, usually providing dividends and the right to vote in the…

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4. It is a form of security that indicates the holder has proportionate ownership in the issuing corporation. A. Bond C. Deposit D. Investment B. Stock 5. An income based on the outstanding principal and current interest rate. A. Active income C. Passive income