Question 1

In the United States, banks are required to report cash deposits that exceed $10,000 a day to any one account, regardless of how many branches or deposits have been used in the transactions. Banks are also required to report when cash is used to purchase cashier's checks, money orders, traveler's checks, or bank checks in excess of $3000. In the Untied States, accounts are federally insured by the Federal Deposit Insurance Corporations (FDIC). An individual is limited to __________ in insurance coverage at each bank (including branches).

Accepted Answer

The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $100,000 per depositor, per insured bank, for each account ownership category.

Question 2

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?

Accepted Answer

The answer of Options are quoted daily in the newspapers....

Question 3

The balance sheet is the fundamental report of a company's financial position. An examination of a balance sheet will assist in determining:

Accepted Answer

The balance sheet provides information about a company's assets, liabilities, and equity. This information can be used to determine if the company meets its financial obligations (A) and the company's debt ratio (C).

Question 4

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, then he or she would have the right to buy 5% of newly issued shares. These are:

Accepted Answer

Preemptive rights allow shareholders to purchase additional shares in proportion to their existing holdings before the company offers them to the public, maintaining their ownership percentage.

Question 5

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:

Accepted Answer

Warrants allow the holder to purchase shares at a fixed price, not the current market price, when exercised.

Question 6

Deposit accounts are either interest bearing or non-interest bearing. Interest bearing accounts includes _________ and ___________. The types of accounts bear interest for a fixed period of time and are known as time deposits.

Accepted Answer

Savings accounts and certificates of deposit are both interest-bearing accounts.

Question 7

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?

Accepted Answer

Interest rate options are used to speculate on the direction of interest rates, and their trading is limited compared to other options. They are primarily traded in the futures market.

Question 8

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

Accepted Answer

The answer of Securities available for sale should be reported...

Question 9

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 generally appointed to ensure that the obligations defined in the agreement are of trust indenture must e filled with SEC. What is it?

Accepted Answer

A trust indenture is a legal document that outlines the responsibilities of the corporation and the bondholders, and it is designed to protect the rights of the bondholders. It is filed with the SEC and often involves a trustee to ensure compliance.

Question 10

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

Accepted Answer

The recommended method is to report interest income separately from trading income if the amount is material, to provide clearer financial reporting.

Question 11

Notes and bonds are long-term debt instruments. Long-term debt instruments are sold at ______________ when the market rate _____________ the stated interest rate.

Accepted Answer

Long-term debt instruments like notes and bonds are sold at a discount when the market interest rate exceeds the stated interest rate, as investors require a higher yield to compensate for the lower interest payments.

Question 12

___________ 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.

Accepted Answer

The answer of ___________ are investment securities that do not...

Question 13

Exception reports generated by the lending institution are designed to identify past-due loans. Auditors should review these exception reports to identify an unusually high number of exceptions and old or unusual exceptions that might indicate that:

Accepted Answer

Exception reports with a high number of old or unusual exceptions suggest that the institution may not be addressing these issues promptly.

Question 14

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

Accepted Answer

Nominal yield and yield to maturity are both terms that apply to bond yields. Nominal yield refers to the bond's coupon rate, while yield to maturity considers the total return if the bond is held until it matures.

Question 15

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

Accepted Answer

The answer of A bond currently priced at $1,250 with...

Question 16

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 out of the basic rights of stockholders?

Accepted Answer

The answer of Stockholders are generally allowed one vote per...

Question 17

Commercial, residential and consumer are three basic types of:

Accepted Answer

Commercial, residential, and consumer are categories of loans, which encompass various types of borrowing for different purposes.

Question 18

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

Accepted Answer

Stockholders typically vote on the election of the board of directors and changes to the corporate charter during annual meetings. Reconciliation and takeovers are not standard issues voted on by stockholders at these meetings.

Question 19

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

Accepted Answer

The question asks for the information provided in the listing, which includes the closing price that day, the strike price of the option, and the closing prices (premiums) of the 3 call and 3 put contracts trading closest to expiration.

Question 20

The financial institutions' general ledger records activity on deposit accounts. Posting of time deposit transactions usually occurs on the day transaction occurs or the next day. The following audit objectives and steps should be considered when performing an audit of deposit accounts EXCEPT:

Accepted Answer

The audit objective related to determining whether deposit transactions and any expense is posted properly is not directly related to the audit of deposit accounts, as expenses are not typically part of deposit account transactions.

Exam 1: Certified Financial Services Auditor