Finance 2010

A. Yes, because the human resources department is considered an outside customer. (B). Yes, because it involves the operational aspects of safety and security. C. No, because the human resources department does not interact with outside customers. D. No, because human resources does not use operations.

A company trains its human resources department in how to handle emergency situations. Is this an example of operations management?

A. e-invoicing B. malware (C). PIN debits. D. PEPPOL (Pan-European Procurement On-line) The answer is C, PIN debits. In addition to account numbers, customers must also provide their PIN number to process online payments. This adds an additional layer of protection for online transactions. Malware is malicious software used to illegally obtain account and personal information provided for online transactions. E-invoicing is electronic billing. PEPPOL is an initiative that aims to provide standardized processes for businesses to bid on government contracts.

A control that financial institutions have implemented to protect bank accounts when debit cards are used to pay for online transactions is

A. investment return. B. profitability. C. efficiency. (D). Liquidity. The answer is D, liquidity. The creditor wants to know that the business has sufficient cash on hand to meet its obligations. If the creditor determines that the business is unable to meet its current short-term obligations, the creditor most likely will deny the credit request. Profitability is concerned with whether the business is making a profit and whether it's sufficient to maintain business operations. Efficiency focuses on whether the business is making the best use of its resources. Investment return lets investors and creditors know what return they can expect to get from a business.

A creditor carefully examines a business's financial information to determine whether the business has sufficient money to meet its short-term obligations when they come due. In this situation, the creditor is concerned about the business's

(A). $1,197.52 B. $731.29 C.$466.23 D.$1,719.51 The answer is A, $1,197.52. Many businesses generate account statements to summarize their customers' purchasing activities and amounts due for a specific time frame. Because the customer sent a partial payment for a purchase, the balance due should be added to the next statement. To calculate the balance due, first subtract the amount paid from the original purchase amount ($2,456.29 - $1,725 = $731.29). Then, add this figure to the total of the most recent purchases ($731.29 + $466.23 = $1,197.52) The customer owes Webster $1,197.52.

A customer sent the Webster Company a check in the amount of $1,725 as partial payment for a $2,456.29 purchase. During the current billing cycle, the customer made several purchases, customer. How much money does the customer owe Webster?

(A). Capital budgeting B. Employee scheduling C. Vendor selections D. Adding/dropping products The answer is A, capital budgeting. A financial-information management system is a set of processes, people, and equipment used to gather, store, organize, and provide financial information to decision-makers. A financial manager might use a financial-information management system to make capital budgeting decisions. Capital budgeting involves developing a plan to acquire and finance long-term business assets. Financial managers would not use a financial-information management system to schedule employees. Although a financial-information management system might be useful when selecting vendors or adding/dropping product, those decisions would not be made by financial managers.

A financial-information management system can help a financial manager to make which of the following types of decisions:

(A). protect stockholders. B. ensure earnings. C. limit benefits. D. control costs. The answer is A, protect stockholders. Public corporations often have thousands of shareholders. To protect the rights and financial well-being of the shareholders, governments regulate corporations' financial activities- activities that are carried out by the corporations' management teams and their boards of directors. The regulation of financial activities does not ensure earnings, limit benefits, or control costs.

A primary reason that governments regulate corporations' financial activities is to

A. confirm personal understanding of the information. B. verify the timeliness of the information. C. analyze the author's emotional intelligence. (D). evaluate the author's level of credibility. The answer is D, evaluate the author's level of credibility. When conducting research for a business, it is important to consider the sources level of credibility. a person who has extensive knowledge of or expertise of a specific topic is more credible and more likely to present valid or reliable information. For example, an article about the side effects of a medication tends to be more credible if it was written by a doctor or pharmacist rather than if the article was written by a financial planner or mechanic. Although the timeliness of written material is a consideration, it is not related to the author's level of expertise. A researcher cannot always determine the author's level of emotional intelligence by reading a written document. And , it is possible to possess a high level of knowledge about a subject and have low emotional intelligence. The way in which the article is written, rather the author's expertise, will impact the understand-ability of the information.

A researcher should consider an author's expertise in a particular topic when assessing the validity of written articles and publications to

A. $2.75 (B). $3.25 C. $3.75 D. $2.50 The answer is B, $3.25. Marginal cost is the change in cost that occurs when a business increases or decreases production, and is used to calculate the extra cost of producing one additional item. To determine the marginal cost of producing each additional hammer, first calculate the change in total cost by subtracting the total costs before production from the total costs after production began ($62,500 - $56,000 = $6500). Therefore, the company's costs increased by $6,500 after it produced 2,000 hammers. To calculate the marginal cost, divide the change in total cost by the number of hammers ($6,500 ÷ 2,000=$3.25).

A small tool manufacturer's total costs were $56,000 before it began to produce hammers. When the manufacturer produced its first 2,000 hammers, costs increased to $62,000. What was the marginal cost of producing each hammer?

A. Regression B. Estimation C. Clustering D. Prediction The answer is C, clustering. Clustering involves dividing customers in a database into groups based on their similarities and differences. Estimation is used to determine a value for an unknown variable such as sales forecast. Regression involves using existing values to forecast what continual values will be. Prediction uses historical data to build a model to forecast future customer behavior.

A stock broker is using Customer Relation Management (CRM) technology to learn more about his typical customer's purchasing pattern. The stock broker is using CRM technology to analyze the typical customer

A. allow company employees to use inside information for personal gain. (B). provide information to investors so they can make informed decisions. C. require companies to disclose all information about their operations. C. prevent a stock's par value from dropping below its market value. The answer is B, provide information to investors so they can make informed decisions. Full-disclosure laws and regulations require companies to disclose- publicize-any information that could affect the value of the firms' stocks. Investors need this information so they can make informed buy, hold, or sell decisions about investments. Full disclosure laws also prevent company employees and other insiders from using privileged information for their personal gain. Full-disclosure laws do not require companies to disclose every bit of information about their operations - some undisclosed trade secrets are permitted. Full-disclosure laws and regulations are not designed to impact par values of stock.

An important purpose of full-disclosure laws and regulations is to

A. develop the letter in several formats and send the letter that her supervisor likes best. B. select the block format because it is the most widely used. C. select the simplified format because it is impersonal (D). ask her supervisor which letter format the company uses. The answer is D, ask her supervisor which letter format the company uses. Companies may prefer that their employee format business correspondence in a specific way to ensure consistency within the organization. To save time and effort, Ann should ask her supervisor which letter format the company uses, such as the block format or simplified format. Developing the letter in a variety of formats is an inefficient use of time.

Anna, a new employee with Turbo Electronics, must write a letter to a customer. Because Anna does not know which letter format to use, she should

(A). A car. B. a meal C. socks D. gasoline. The answer is A, a car. Product type affects a customer's buying behavior. Customers who exhibit complex buying behavior are highly involved in the purchase because the product tends to be more expensive and risky. When the purchase is a form of self-expression, it affects the customer's status or image, and brand is an important factor. Because cars are expensive and vary in dependability and style, customers tend to spend more time evaluating their options before buying . Meals, shoes and movie tickets are routine purchases, so customers tend to exhibit habitual buying behavior rather than complex buying behavior when purchasing these items.

Complex buying behavior is most likely involved when the customer is purchasing

(A). Consistent B. comparable. C.reliable D. conservative. The answer is A, consistent. Consistent financial information results from the application of similar or identical accounting methods and systems over time within an organization. The Normandy Company has applied very similar accounting methods over its 20 years of operation. Therefore, the company's financial information is likely to be consistent. However, consistent information may not be comparable. Reliable information is accurate and unbiased. The Normandy Company, though, could easily have inaccurate financial information, even though it is consistent. Conservative financial information does not over state assets and sales or understate liabilities and expenses.

During its 20 years of operation, the Normandy Company has made very few changes to its accounting methods and system. As a result, the company's financial information is likely to be very

A. similar personality traits. (B). mutual respect C. authoritarian attitudes D. selective communication The answer is B, mutual respect. Coworkers must often collaborate with one another to accomplish business goals. For effective collaboration, coworkers must be respectful of one another. This involves being willing to share ideas, appreciating the contributions and knowledge of one's coworkers, and acknowledging each coworker's right to express opinions that others may not agree with. Effective collaboration does not require coworkers to have similar personality traits. An authoritarian workplace structure or management style may hinder collaborative efforts. Effective collaboration requires open and honest communication among all of the coworkers involved in the project or activity.

Effective collaboration among coworkers requires

A. be documented appropriately. B. grow by at least ten percent. C. be accrued on debt security. (D). exceed the rate of inflation. The answer is D, exceed the rate of inflation. When making investments, it is important to consider the time value of money, which is the difference between the money's current purchasing power in relation to its purchasing power at a future date. Earnings from investments can come in different forms, such as accumulated interest from debt securities or dividends from equity securities. At the end of the investment period, a successful investment will yield more money that the investor started with. However, it is important to consider the rate of inflation - which is an increase in prices of goods an services. If inflation increases more rapidly than the investment earns (e.g., 10%) during the investment period, then the value of money earned will not yield the desired results. Documents and forms do not affect the time value of money.

For an investment to yield positive results at the end of the investment period, the earnings should

A. Interbonds B. Yankee bonds. (C). Eurobonds D. Savings bonds. The answer is C, Eurobonds. Eurobonds are bonds sold in a foreign country in the currency of the issuing company. Frankfort and Sons, for example, is an American firm, so its Eurobonds will be denominated in American dollars. However, these bonds will be sold overseas, not in the United States. Yankee bonds are issued in the U.S. by a foreign company and denominated in American dollars. Interbonds are fictitious. Savings bonds are issued by the U.S. Department of the Treasury. They are nontransferable securities that can be cashed prior to their maturity date.

Frankfort and sons, an American firm, is preparing to issue bonds overseas. Even though the bonds will be sold outside the U.S., They will be denominated in American dollars. These bonds are called

A. The best form of business ethics is risk management. B. Risk management is all about the ethical treatment of customers. C. Risk management is insurance for lapses in business ethics. (D). The best form of risk management is adherence to business ethics. The answer is D,The best form of risk management is adherence to business ethics. Every breach of business ethics represents a potential risk for businesses. The best thing businesses can do to overcome most risks is to do the right thing - practice business ethics. Risk management includes the ethical treatment of customers as well as a variety of other factors. Insurance is one way to overcome business risks; however, risk management is much more than insurance.

How do ethics relate to risk management?

A. put the customer on hold until the research has been completed. B. ask the sales manager to call the customer back. C. send the customer literature about the business and its products. (D). follow-up with the customer after obtaining the requested information. The answer is D, follow-up with the customer after obtaining the requested information. When employees do not know the answer to their customers' questions, they should take steps to get the answers. This often involves researching the problem or issue. When extensive research is required, an employee should obtain the customer's contact information and call him/her back with the requested information after the research has been completed. The nature of the inquiry determines if literature should be sent to the customer or if another employee or manager should answer the customer's inquiry. For example, a question about a bill may be better answered by an accounts-receivable employee than a purchasing agent. And, in this situation, it would be inappropriate to send product information.

If an employee needs to do some research to answer a customer's telephone inquiry, the best action for the employee to take is to obtain the customer's telephone number and then

(A). Investment banking B. a stock exchange C. a brokerage house D. financial planning The answer is A, investment banking. Investment banks trade securities, help businesses and governments issue securities, and handle the financial -side of mergers and acquisition. Financials planners help individuals make financial and and investment decisions. They may also buy and sell certain financial products, such as securities, retirement plans, and insurance policies. A brokerage house is the most common type of firm that specializes in trading securities for clients. A stock exchange is where security trading is conducted by professional stockbrokers.

If you wanted to pursue a career that specializes in helping corporations and governments issue securities, you would work in

A. logic and emotions. B. skills and natural resources C. specific goals and income. (D). values and aspirations. The answer is D, values and aspirations. Vision refers to the future you wish to create. A vision is a reflection of your values - what is important to you. A vision is also a reflection of your aspirations - your dreams and passions. Often a vision begins with an abstract idea that is based on emotion rather than logic. After realizing or acknowledging a vision, then you should consider the resources (e.g. special skills and money) that you will need to carry out the vision, which involves setting goals to achieve the vision.

Important considerations when identifying your personal vision are your

(A). Exploration B. Model building and validation C. Prediction D. Deployment The answer is A, exploration. The exploration stage of data mining generally starts with preparation of the data. This includes such activities as data cleaning, data transformation, selecting subsets of records for analysis, selecting the variables of interest, and choosing the analytic method to apply. The second phase of the data-mining process is model building and validation in which various models appropriate for the study are identified, and the best one is selected. Deployment is use of the selected model. Prediction is not a stage in the data-mining process; however, data miners want to make predictions from their data-mining activities.

In what stage of the data-mining process would you clean data in a database?

(A). Cash B. Accrual C. Financial D. Managerial With cash accounting, transactions are recorded when money is received or spent. This results in problems since the service might be provided during one accounting period, but payment is not received until another accounting period. In addition, businesses can be accused of manipulating theri numbers to their advantage. With accrual accounting, transactions are recorded at the time they occur regardless of when money is exchanged. Managerial accounting is concerned with providing financial information internally to managers. The number and types of reports generated vary based on a manager's needs. With financial accounting, accountants prepare financial information for external users such as the government, bankers, and stockholders. The number and type of reports generated for financial accounting does not vary.

In what type of accounting system are revenue and expenses accounted for at the time money is received or spent?

A. While casually talking with acquaintances during a social gathering. (B). During a meeting in which business-people share the same vocabulary. C. When making a public speech to the residents of a local community. D. While demonstrating a complex machine to a new customer. The answer is B. During a meeting in which business-people share the same vocabulary. Jargon is specialized language known only to a certain group of people. Jargon is most often used by people who work within the same organization or industry. Using jargon in social situations, during speeches, or with new customers may confuse the message that recipients receive because these audiences may not be familiar with the meaning of jargon.

In which situation is it most appropriate to use technical jargon to communicate information?

A. They are trusted to maintain an accurate accounting of people's revenue and expenses. (B). others rely on the information when making credit and/or investment decisions. C. they maintain both brick-and-mortar and virtual businesses for trading. D. people know that investment firms would not take advantage of them. The answer is B, others rely on the information when making credit and/or investment decisions. It's important for investment firms to share their actual financial situation rather than manipulate the numbers to present the most desired financial situation. Accountants, rather than investment firms, maintain an accurate accounting of people's revenue and expenses. Having both brick-and-mortar and virtual businesses would not impact the accuracy of investment firms' reporting. Unfortunately, most people understand that not all people are honest. Therefore, they need to know enough about investing to make good choices.

Investment firms must accurately report their financial position because

(A). Whistle Blowing. B. being a tattle tale. C. handling an accident appropriately. D. establishing security procedures. The answer is A, whistle blowing. A whistleblower is a person who reveals any wrongdoings or malpractices that are taking place within an organization. Jane attempted to resolve a potential problem internally with her manager, but needed to go outside her organization to get the problem resolved. Countries, such as the U.S. and Canada, have whistleblower laws that protect whistleblowers from retaliation. Attempting to ensure the safety of others is not being a tattle tale- it is being a responsible adult. Because it can be interpreted by some people as tattling, whistleblower laws may be used to protect the person who reports noncompliance. Jane is attempting to prevent an accident; one has not occurred, yet. Security procedures are set in place by a company's management. Jane is reporting noncompliance that may result in a company's deciding to establish new security procedures.

Jane works in a factory. She has noticed that sections of the factory floor are consistently slippery because oil drips on them. She has reported this to her manager twice, but the problem hasn't been corrected. Jane is so worried that an employee could slip and fall that she contacts the government agency that handles workplace safety. This is an example of

A. natural resource investing. (B). group affinity C. private placement offering D. life settlement The answer is B, group affinity. Group affinity fraud typically involves a scammer who either claims or actually is a member of the investor's group. In this case, the man is a member of the same health club and attends the same church as Alice. Because the scammer is a member of the same group, investors may falsely believe they can trust the scammer, especially if the scammer has lured in a few well-respected group members (like the minister or the gym manager) to buy into the scam early on. Natural resource investing fraud occurs when a scammer convinces investors to put money in fraudulent energy investments. Investors are tempted by the scammers's promise of a fast, easy return. Private placement offering fraud involves convincing investors to buy nonexistent stock from businesses. Life settlement fraud occurs when a scammer purchases a large life insurance policy from the insured for an unreasonably small amount of money. This usually occurs when the insured person needs money to pay necessities such as medicine and medical care before death.

Last week, a man who frequents Alice's health club and goes to the same church approached her an stuck up a conversation. After a bit of small talk, the man said that he would love to help Alice earn some money on the stock market. "You can trust me," the man said. "We go to the same church and the same gym. In fact, our minister and the manager of the gym just gave me a tn of money to invest for them!" The man is attempting to commit _________fraud.

A. ethical standards (B). self-confidence C. systematic behavior D. empathy The answer is B, self-confidence. Self-confidence is a positive belief in your own talents, skills, and objectives. Ethical standards are the basic principles or unwritten rules that govern your behavior and help you recognize right from wrong. Systematic behavior involves conducting activities in an organized, logical and methodical manner. Empathy is the ability to put yourself in another person's place.

Marisa believes that she possesses the skills to make a positive contribution to the work team. Marisa is exhibiting

A. a safe work environment (B). Fair Treatment. C. the right to privacy D. the option to buy stock. Discrimination is the unfair treatment of a person or group based on the person's or group's characteristics, which includes race, religion, and gender. In the example, the business pays both its male and female employees the same salary range for the same type of work, which indicates it is treating people fairly on the basis of their gender. In many countries, there are laws that prohibit discrimination, so businesses should take steps to ensure that they are in compliance with the law and treating people fairly on the basis of their gender. In many countries, there are laws that prohibit discrimination, so businesses should take steps to ensure that they are in compliance with the law and treating their employees fairly. The example does not describe the employees' right to work in a safe environment or their right to privacy. Businesses do not prevent employees from buying stock. Some types of corporations encourage their employees to buy their company stock.

The Dewberry Company pays both its female employees and its male employees the same salary range for the same type of work. Dewberry is providing its employees with

A Global positioning B. Traditional (C). Wireless D. Dial up The answer is C, wireless. Wireless technology is redefining the way in which the wold communicates. Cellular phones are a wireless form of communication. Businesses have the ability to send time-sensitive text messages at any time to their customers who have opted-in to receive updates on their cell phones. Cell phones are not examples of traditional, global positioning (GPS), or dial-up technology.

The MSB Company provides its customers with critical or time-sensitive product information by sending them alerts or messages through their cellular phones. What form of technology is MSB using as an element of customer relationship management?

A. Form 10-K (B). Form 8-K C. Form 10-Q D. Form 4 The answer is B, form 8-K. Publicly-traded companies are required to provide information about their finances to the Securities and Exchange Commission (SEC) every quarter. For the first three quarters of the fiscal year, publicly-traded companies file 10-Q reports that focus on the company's financial situation for that period of time. At the end of the fourth quarter of each fiscal year, each company is required to file a Form 10-K, which is similar to an annual report. It includes detailed information about the company, its competitors, risks it faces, legal proceedings that the company is involved in, and audited financial statements. In addition to these standard, routine documents, a company is also required to file a Form 8-K, also known as a current report if a significant, non-recurring event occurs before a 10-Q or 10-K is due. Events might include changes in key management, introduction of a new product, legal actions,or the acquisition of another company. Form 4 tells you when insiders are buying or selling the company's stock.

The Milton Ladder Corporation, which is publicly traded, is in the process of acquiring the Bradley Chute Company. What type of document is Milton Ladder required to file within 15 days of the acquisition?

A. your mutual fund manager's education. B. how you earn the money that you invest C. your educational background and (D). how long your money is invested. The answer is D, how long your money is invested. The most important factors to consider in compounding growth are how much money you invest, how much your investment grows each year, and how long our money is invested. Investing is using money to make money, which means that if you invest money in the stock market, for example, you are likely to make an average of 10 percent each year. As the years pass, your investment will grow tremendously because you will be earning interest on interest. So, it is beneficial to invest for as long as possible to earn the largest amount of compound interest as possible. How you earn the money that you invest, your educational background and career and your mutual fund manager's education have a much smaller impact on the compounding growth than time does.

The key factors involved in compounding growth are the amount of money you invest, how much your investment grows each year, and

A. high cost and over-dependence on a single GRC platform B. high cost and overabundance of adequate technology solutions. (C). high cost and lack of evidence of return on investment. D. centralization of business risk and lack of adequate technology solutions. The answer is C, high cost and lack of evidence of return on investment. Although GRC technology can be very beneficial for business, many companies encounter difficulties when implementing the technology. The most significant barriers are the perceived high cost of the technology and a lack of evidence that the technology will provide a sufficient return on investment. Other barriers include a lack of adequate technology solutions, the absence of a common risk management/compliance "language," and poor change management during the implementation process. Benefits of GRC technology include the use of a single GRC platform, increased communication among risk management teams, and centralized risk and compliance oversight. Centralized business risk is neither a barrier nor a benefit of GRC technology.

The most significant barriers that many companies face when implementing integrated governance, risk, and compliance (GRC) technology are the perceived

A. provide insensitive feedback. (B). collaborate with others. C. take on all jobs D. withhold his/her opinions. The answer is B, collaborate with others. Effective team members must be willing to help, work well with, recognize the strengths of, and listen to other team members. It is important for team members to be objective, provide positive and negative feedback in a courteous, respectful way, and offer their opinions as needed. Team members should be willing to perform any activities they can - even those activities they don't like to do , but they shouldn't take on complex or technical jobs that they are not qualified to perform.

To be an effective team member, an employee needs to be willing to

(A). derivatives. B. emerging markets. C. venture capital D. no-load funds The answer is A, derivatives. Derivatives are financial instruments whose value depends upon the value of the other financial instruments or market indices. Investors frequently use derivatives to hedge or reduce the risk of investing in the foreign exchange market, which is sometimes volatile. The derivatives help to reduce the impact of significant fluctuations in foreign exchange markets. Emerging markets are financial markets in countries with developing economies. Emerging markets are usually receptive to foreign investment, but they are also more volatile and risky than financial markets in developed countries. Venture capital is invested money that is used for new business opportunities. No-load mutual funds have no up-front sales charges.

To hedge the risk of investing in the foreign exchange market, some investors use

A. Operating cost increases (B). Changes in consumer spending C. Production line improvements D. Comprehensive employee training programs. The answer is B, changes in consumer spending. Phases of the business cycle affect consumers' spending habits. During the contraction phase, unemployment tends to increase, so consumers have less money to spend on goods and services. Under the right conditions, a business might be able to lower its prices on some of its popular items, if operating costs do not increase and the business can maintain a reasonable profit. By lowering prices, the business may be able to keep its customers and attract new price-oriented markets. Production line improvements are internal factors that may prompt a business to lower its selling prices. As production becomes more efficient, production costs tend to decrease, making it possible to lower selling prices and still earn a profit. Providing employees with effective training helps to improve productivity.

To maintain its current customer base and attract new markets, the KMV company lowered the prices of some of its products. What external factor most likely influenced this action?

A. know standard first aid. B. purchase the most efficient equipment. C. purchase the newest equipment (D). Follow the instruction manual. The answer is D, follow the instruction manual. Each piece of machinery comes with an instruction manual that outlines its proper use. Even experienced workers should read and follow these instructions. Without proper usage (as written in the instruction manual) a worker can be injured on any type of equipment, including machines that are very new and very efficient. While knowing first aid will help after an injury occurs, it does not prevent injuries.

To prevent injuries when operating machinery, it is important to

A. Plan components B. Develop Planning document (C). Business plan elements D. Business document components The answer is C, business plan elements. To retrieve the most applicable results from an Internet search engine, a computer user should enter terms into the query field that are most likely to bring up the desired information. "Business plan elements" are words that are most likely to retrieve the information Todd needs, which is the type of information, which is the type of information that he needs to include in his business plan. If Todd is not satisfied with the results that his initial search returns, he could use search terms such as "business plan components" or "business plan parts." The remaining search terms are too general and would likely not provide the information Todd desires on the first few pages of the results, which would reduce Todd's efficiency in retrieving the desired information.

Todd needs to develop an overall plan for his business but does not know what type of information to include in the document. Todd logs onto a search engine to quickly locate the information he needs. Which of the following search terms are most likely to provide Todd with desired search results:

A. American Stock Exchange (AMEX) B. New York Stock Exchange (NYSE) C. Toronto stock Exchange (TSX) (D). Over the Counter Bulletin Board (OTCBB) The answer is D, Over the Counter Bulletin Board (OTCBB). Very small companies that don't meet organized exchange listing requirements as well as companies with poor credit ratings are likely to trade their stock on the Over the Counter Bulletin Board (OTCBB) The OTCBB is a regulated electronic exchange with no listing requirements. Therefore, stocks traded on the OTCBB are likely to be riskier investments than stocks traded on organized exchanges such as the New York Stock Exchange or the Toronto Stock Exchange. The American Stock Exchange is an organized exchange which became the NYSE Amex Equities in 2009.

Very small companies and companies with poor credit ratings are most likely to trade their stock on the

A. Certified Banker (CB) B. Chartered Financial Analyst (CFA) C. Certified Stock Broker (CSB) (D). Chartered Financial Consultant (CsFC) The answer is D, Chartered Financial Consultant (CsFC). These individuals are often self-employed and work flexible schedules to accommodate their clients' schedules. They have covered all the requirements for the Certified Financial Planner designation and received advanced education in retirement and estate planning. Financial analysts seek the CFA designation. Certified Stock Broker and Certified Banker are fictitious designations.

What certification is sought by individuals who provide guidance to individuals and families about their investments and financial decisions and also buy and sell certain financial products such as insurance and retirement.

A. Decreases auditors' ability to trace the numbers used in budgets B. Increases amount of time that needs to be spent on value-added activities C.Decreases the need for having an audit trail (D). Increases management's confidence in budgets The answer is D, increases management's confidence in budgets. The efficient management of budget data benefits businesses in a variety of ways, including error detection and control, decreasing the time needed for completing the accounting cycle, and increasing management's confidence, not only in budgets, but also in financial statements and performance scorecards, etc. Since use of efficient budgeting applications decreases the amount of time required to complete the accounting cycle, financial professionals have time to spend on value-added activities, such as decision-making and presentation of information, rather than having to spend more time on them. Audit trail and increased ability to trace the numbers used in budgets are natural outgrowths of the use of budgeting applications.

What is a benefit of managing budgeting data efficiently through budgeting applications?

A Being satisfied with the status quo B. Limiting the employees' decision making (C). Aligning business activities with customer needs. D. Reducing the number of touch points with the customers. The answer is C. Aligning business activities with customer needs. A customer-centric business focuses on customer needs and wants. To focus o the customers' needs and wants, the business must ensure that is business objectives and activities align with its customers' needs and wants . A customer-centric business must continuously improve its processes and products to accommodate its customers' changing needs and wants- the business cannot be satisfied with the status quo. A customer -centric business allows its employees to provide input and make decisions in relation to customer relationships. Touch points are all of the opportunities that business have to connect with customers and reinforce their brand value. A customer-centric business is not likely to reduce the number of customer touch points.

What is an important aspect of a customer-cnetric business?

A. Increased Spending B. Higher consumer demand C. Decreased unemployment D. Lower standard of living The answer is D, lower standard of living. The inflation rate is the speed in which prices rise is the marketplace. When inflation increases, and employers do not provide their workers with raises to keep up with the rate of inflation, then the employees do not have as much money to spend on goods and services. When workers have less purchasing power, their standard of living (quality of life) may be negatively impacted because they cannot buy things that they were once able to afford. When workers are not earning more money, they are not increasing their spending levels. When people are spending less money, lower demand for some consumer products may occur. When there is a reduced demand for products, businesses often lower production and lay off workers, which increases the level of unemployment.

What is likely to occur when the inflation rate increases, and workers do not receive pay increases?

A. Accounting relies on finance to generate reports that it uses to create financial statements. B. Accounting and finance perform the same functions. (C). Accounting's reports aid finance in analyzing a company's financial position. D. Accounting uses the revenue and expense reports generated by finance to make financial decisions. The answer is C, accounting's reports aid finance in analyzing a company's financial position. Accounting and finance are closely related because finance relies on accounting to generate the reports it needs to make financial decisions. These reports show revenue and expenses on the financial statements. Finance's work begins where accounting's work leaves off.

What is the connection between accounting and finance?

A. It is the time period in which the difference between revenue and expenses is the greatest. B. It represents the time period in which a trend is first detected (C). It is the time period that is used as the basis for comparisons. D. It represents the time period in which the difference between accounts receivable and accounts payable is the smallest. The answer is C, it is the time period that is used as the basis for comparisons.The base year is the starting point for comparison; therefore, each category on a financial statement in the base year is 100%. By subtracting the base year's amount from each future amount, and then dividing by the base year amount, you can determine the percent of increase or decrease from year to year. The other responses do not relate to the base year that is used in horizontal analysis.

What is the significance of the base year in horizontal trend analysis?

A. review data to determine if change needs to be made B. Collect data to measure areas identified as problematic C. Make improvements to areas with low customer satisfaction scores (D). Define the gaps between customer satisfaction and the company's capabilities. The answer is D, define the gaps between customer satisfaction and the company's capabilities. Before any measures can be taken or improvements made, a company needs to find out what its customers want and if it is meeting those wants and needs. Once the gaps between what customers want and what the company is delivering are identified, the company can determine how it will measure improvement. Data are then collected and reviewed. After that, improvements are made and continually monitored.

What must be done first to begin a Six Sigma Improvement Model?

A. speculative risk B. Pure risk C. Loss of customers risk (D). Return on investment risk The answer is D, return on investment risk. Cloud computing keeps businesses from having to invest in computer hardware, such as servers, and software, thereby avoiding return on investment risk. Instead, businesses pay a provider only for the services that they use-much like paying an electric bill. The contract with the provider can be ended at any time. Customers will probably receive better service since the business is not having down time when its computers malfunction. Speculative risk is the chance of loss or gain. Pure risk exists when, if something happens, it will result in a loss.

What risk is being avoided when financial institutions use cloud computing?

(A). Long-term solvency. B. Short term liquidity. C. long-term return on investment D. short-term return on investment The answer is A, long-term solvency.Creditors need to predict whether clients will be able to pay off their loans. Therefore, they want to assess clients' long-term prospects of having sufficient funds. They do this by calculating two financial ratios: debt-to equity ratio that tells creditors whether the customer can repay the principal of the loan and interest coverage or Times Interest Earned that indicates whether the client can repay the interest on the loan. Short-term liquidity, on the other hand, focuses on whether the client is able to meet current financial obligations. Investment return lets investors and creditors know what return they can expect to get from a business.

When a creditor analyzes financial data to determine whether a client should be able to pay the principal and interest on a loan, the credit is assessing the client's

A. evaluation (B). Training C. hiring D. compliance The answer is B, training. The human-resources function plans and coordinates employee training programs for the business. Training programs often involve technology-oriented activities, such as interactive computer simulations. Evaluation activities involve tasks related to employee-performance reviews. The hiring process is a staffing activity. Compliance activities ensure that the business follows government regulations.

When a human resources department uses interactive computer simulations to help employees learn how to do their jobs, it is using technology for _________purposes

A. Rise (B). fall C. stay the same D. fluctuate daily The answer is B, fall. The consumer Price Index measures the prices of consumer goods. In the U.S., it is published monthly y the Bureau of Labor Statistics. However, most experts conduct a "year-on-year" comparison to better understand increases and/or decreases in the CPI. An increase in the CPI signals an increase in inflation. A sharp increase in inflation causes interest rates and bond values to rise and stock prices to fall.

When nominal Gross National Product (GNP) increases, the money supply typically

A. decreases B. stays the same (C). increases. D. fluctuates daily. The answer is C, increases. Nominal GNP (the Gross National Product measured in current prices) and the money supply are directly related. When nominal GNP increases, the money supply typically increases as well. Conversely, when nominal GNP goes down, the money supply decreases. And, when the nominal GNP and then money supply to fluctuate on a daily basis. Instead, the money supply would increase or decrease over the long term.

When nominal Gross National Product (GNP) increases, the money supply typically

A. Standard responses. B. technical terms. C. financial acronyms (D). simple explanations . The answer is D, simple explanations. When providing product information to clients, finance professionals should keep the clients' point-of-view in mind. Clients may not be familiar with finance industry jargon, technical terms, or acronyms. Therefore, finance professionals should use simple, clear language that clients understand. While standard responses are sometimes helpful to finance professionals, it is usually better to keep individual clients in mind when providing product information since different clients are likely to have different knowledge bases.

When providing product information to clients, finance professionals should use

(A). Treating the person to a round of golf B. Giving the vendor an expensive gift C. Having salespeople talk to the vendor D. offering jobs to people on the vendor's staff The answer is A, treating the person to a round of golf. Something as simple as four hours of golf gives you the opportunity to get to know a vendor better. It gives you an opportunity to learn the person's interests and to talk business in a casual environment. Giving the vendor an expensive gift might be construed as a bribe. Although having salespeople talk to the vendor is helpful, it doesn't foster a professional relationship with you. Offering jobs to people on the vendor's staff would create conflict rather than helping to build a positive, professional relationship.

Which of the following has proven to be an effective way to initiate a professional relationship with a vendor?

A. Identifying cost-savings opportunities for future projects (B). Identifying cost-savings opportunities for the current project. C. Identifying ways to improve project planning D. Identifying ways to improve the company's processes The answer is B, identifying cost-savings opportunities for the current project. Identifying cost-savings opportunities for the current project. A post-implementation review is conducted after a project is finished. Therefore, there is not an opportunity to save money on the current project. There is an opportunity to identify ways to improve future projects, such as cost-savings measures, improving project planning methods, and improving the processes used by the company.

Which of the following is NOT a benefit of a post-implementation review?

(A). Chartered Financial Analyst (CFA) B. Certified Financial Planner (CFP) C. Chartered Financial Consultant (ChFC) D. Certified Stock Broker (CSB) The answer is A, Chartered Financial Analyst (CFA). This professional designation is sought by financial analysts and is sponsored by the CFA Institute. Every candidate for the certification is required to complete three levels of study and exams. Certified Stock Broker is a fictitious designation. Certified Financial Planner and Chartered Financial Consultant are designations sought by financial planners and financial consultants.

Which of the following is a certification sought by individuals who evaluate companies and industries and make buy, sell, and hold recommendations for certain securities:

A. Employees cannot understand financial statements. B. Employees receive information before it's needed in the department. (C). Employees cannot correctly assess trends. D. Employees are able to increase their efficiency. The answer is C, employees cannot correctly assess trends. When financial information is poorly managed, employees are hindered from correctly assessing their performance and trends. It also takes a long time to access requested information, thereby delaying use of the information and decreasing employee efficiency. Employees' ability to understand financial statements is not an outcome.

Which of the following is a common outcome of poor financial-information management in a finance department:

(A). irregular paychecks. B. Long working hours C. Shorter vacations D. Lower production standards Entrepreneurs experience many types of challenges as they start and grow their businesses. A financial concern often involves irregular paychecks or unpredictable income. It of then takes a while for a new venture to gain business and earn a profit, so the entrepreneur often doesn't receive income or get paid at regular intervals. Long working hours and shorter vacations are factors related to the entrepreneur's personal commitment to his/her business. Production standards are specifications related to the entrepreneur's personal commitment to his/her business. Production standards are specifications related to the process of making or producing goods and services.

Which of the following is a financial concern that entrepreneurs often face when starting new businesses:

(A). An online business allows its customers to download and share music without the recording artist's consent. B. An apparel company imprints a hockey league's logo on a new line of sportswear. C. A manufacturer attempts to produce another business's invention, which has been registered with the government. D. A computer company develops a new project-management software program. The answer is A, an online business allows its customers to download and share music without the recording artist's consent. A copyright provides legal protection of artistic and written works, (e.g., books, music, plays) to their owners, (creators). A copyright grants the owners the sole rights to use and distribute their works for a specific amount of time. A copyright grants the owners the sole rights to use and distribute their works for a specific amount of time. Individuals or businesses that access, use, or distribute copyrighted materials without the obtaining the owner's permission are guilty of copyright infringement and may be sued by the copyright owner.

Which of the following is a situation that involves the illegal use of copyrighted material:

A. Managers usually train the employees to do the work. B. Managers must be able to do their employees' jobs. C. Managers allow employees to set the organizational standards. (D). Managers decide how to use the business's resources. The answer is D, managers decide how to use the business's resources. Management is the process of coordinating resources to accomplish an organization's goals. Managers are responsible for coordinating the resources needed to operate the business, including human resources (Staffing), financial resources, equipment, and supplies. Coordinating resources involves using them in efficient, cost-effective ways. Managers must understand the employees' jobs, but they do not always need to know how to perform them. Executive-level managers, rather than employees, set the organizational standards. managers determine the type of training needed, but do not always train the employees themselves.

Which of the following is a true statement about managers:

A. Variance analyses B. Data reconciliations (C). Segregation of duties D. Physical inventories The answer is C, segregation of duties. Preventive controls such as the segregation of duties attempt to prevent unwanted events (noncompliance) from occurring. Detective controls, on the other hand, are used to identify and document noncompliance. Data reconciliations, variance analyses, and physical inventories are all detective internal controls. Corrective controls are used after noncompliance has been identified. They may include disciplinary action or additional training.

Which of the following is an example of a preventive internal control:

A. Sales slips (B). Financial condition C. Invoices D. Classification of expenses The answer is B, financial condition. Accounting systems consist of inputs that are processed to create outputs. Examples of inputs are checks, invoices, sales slips, and receipts. When these inputs are processed, accountants analyze, classify and record them. The result of processing is the outputs. Decision makers can determine such thngs as a business's financial condition, the result of the business's operations, and investments by and distributions to owners.

Which of the following is an output of a financial system:

A. Data in a Statement of Cash Flows B. Data from the most recent financial report (C). Data in financial reports from multiple time periods. D. Data from a zero-based budget The answer is C, data in financial reports from multiple time periods. Trends indicate the direction that something is headed. They depict patterns. Horizontal analysis requires the comparison of data over a period of time. You cannot look at a single financial report and spot trends for a horizontal analysis.

Which of the following is essential to the identification of trends in financial data for a horizontal analysis:

A. Minimized costs and a reduction in senior management B. A competitive advantage and a reduction in senior management. (C) A competitive advantage and minimized costs D. Increased government scrutiny and minimized costs The answer is C, a competitive advantage and minimized costs. By developing a proactive compliance plan, a business is likely to create a competitive advantage for itself and enhance its reputation. At the same time, a proactive approach to compliance can help the business to minimize costs and reduce risk. Rather that waiting for a problem or instance of noncompliance to occur, many businesses choose to do things properly - in compliance - from the start. Most proactive businesses have grown their senior management to address increasing compliance and risk concerns. This senior level position, of ten known as a chief compliance officer, is responsible for ensuring corporate compliance with government and industry laws and regulations. By avoiding noncompliance issues, proactive companies are likely to receive less government scrutiny than those that wait to react to instances of noncompliance.

Which of the following is most likely to be a benefit of proactive compliance plans for businesses?

A. Developing institutional policies B. Requesting quotes by e-mail C. Establishing tax codes (D). Filing tax returns online The answer is D, filing tax returns online. Filing tax returns online (via the Internet) is a quick, easy way to transmit tax information to government tax agencies. By electronically transmitting tax returns, businesses reduce the lead time that is needed to send the documents by postal mail. Electronic transmission also eliminates the risk of loss by the postal service. The purchasing department usually obtains quotes for the business. Tax codes are established by the government. Small businesses do not use accounting software programs to develop institutional policies.

Which of the following is one way that small businesses use technology to perform accounting tasks:

A. T calculate the business's percentage increase in net sales. (B). To determine if the business is performing above or below average C. To prepare a company budget for the following year D. To determine the return on common stockholders' equity The answer is B, to determine if the business is performing above or below average. Managers often compare their businesses' operating results with industry averages to determine if their businesses are doing better than, worse than or about the same as other firms in the same industry. Th e business's percentage increase in net sales, Next year's budget, and the return on common stockholders' equity can be determined without industry financial information and averages.

Which of the following is the most likely reason why a manager would review financial information of her/his industry and compare his/her business's operating results with industry averages:

A. Having transparency around the effects of volatility on the organization. B. Having too little information that can be used to assess and understand risk (C). Having many different sources of data that can be used to assess risk. D. Having a centralized enterprise risk management system The answer is C, having many different sources of data that can be used to assess risk. Many financial institutions maintain individual or departmental databases that cannot interact with the data throughout the organization. This keeps risk managers from having a clear picture of the organization-wide risks. Rather than having too little information, risk managers have just the opposite problem: too much decentralized information. Centralized information is needed. Transparency is needed around the effects of volatility on the organization.

Which of the following issues is keeping risk managers from getting the right information into the right context so that the right decisions can be made:

A. Postponing a large purchase to a later time (B). Meeting analysts' estimated earnings. C. Accelerating payment of expenses when earnings are high D. Selling securities for a gain. The answer is B, meeting analysts' estimated earnings. Managers are often pressured to ensure that analysts' estimated earnings are reached. Managers should focus on use of accounting principles that provide the most accurate results rather than on providing the most desired results. Otherwise, they will be guilty of cooking the books to provide a more favorable financial report than actually exists. Postponing purchases, accelerating expense payments, and selling securities for a gain are ethical earnings-management practices.

Which of the following leads accountants to apply unethical earnings-management practices:

A. A fund with a low portfolio turnover rate. (B). A fund with a high portfolio turnover rate. C. A fund that concentrates on a specialized sector. D. A fund that attempts to match a broad market index The answer is B, a fund with a high portfolio turnover rate. Regardless of fund type, a fund with a high portfolio rate replaces a high percentage of its investments every year. Every time that fund sells one item in its portfolio and purchases another, a capital gain or loss is being realized. Because these capital gains or losses occur so frequently, it is difficult for fund investors to successfully time the realizations and manage their overall tax obligations effectively. Specialized sector funds focus on a certain industry, and index funds attempt to match broad market indices.

Which of the following mutual funds is most likely to be tax inefficient:

A. Finance collects and presents financial information, while accounting determines financial strategies. B. Finance tracks revenues and expenses when they are incurred, while accounting recognizes them when money is exchanged. (C). Accounting recognizes revenue and expenses when they are incurred, while finance recognizes them when money is exchanged. D. Accounting collects and presents financial information, while finance creates financial statements. The answer is C, accounting recognizes revenue and expenses when they are incurred, while finance recognizes them when money is exchanged. One difference between accounting and finance is their treatment of funds (i.e., revenue and expenses). Accounting generally tracks revenue and expenses when they occur rather than when money is exchanged. Accounting is responsible for collecting and presenting financial information, including the creation of financial statements.

Which of the following represents a difference between accounting and finance:

A. The Small Business Administration and the Federal Housing Administration are examples of deposit-taking financial institutions. B. When a saver deposits funds, s/he receives a claim on the individual or firm to whom the depository institution lends these funds. (C). A deposit-taking institution's primary liabilities are checking accounts, savings accounts, money market accounts, and certificates of deposit. D. Two types of commercial banks are mutual savings banks and savings and loan associations (S&Ls). The answer is C. A deposit-taking institution's primary liabilities are checking accounts, savings accounts, money market accounts, and certificates of deposit. Deposit-taking institutions such as commercial banks are one type of financial institution. Deposit-taking institutions serve as financial intermediaries. Savers deposit their funds in depositary institutions, and then these deposit-taking institutions lend the funds to individuals and firms who need to borrow money. Checking accounts, savings accounts, money market accounts, and certificates of deposit are liabilities for deposit-taking institutions. Essentially, the funds deposited in these accounts are loans made to the institution by individuals, firms, and the government. When a saver deposits funds in a deposit-taking institution, s/he receives a claim on his/her bank account, not the individual or firm who borrows those funds from the bank. The Small Business Administration and the Federal Housing Administration are examples of government and semi-government financial institutions. Mutual savings bonds and savings and loan associations are types of thrifts, not commercial banks.

Which of the following statements about deposit-taking financial institutions is true:

A. contributions and withdrawals during retirement are tax deductible. B. Contributions are tax deductible, but withdrawals during retirement are taxed. C. Contributions and withdrawals during retirement are both taxed. (D). Contributions are taxed, but withdrawals during retirement are not. The answer is D. Contributions are taxed, but withdrawals during retirement are not. Contributions paid into Roth Individual Retirement Accounts (IRAs) are taxed. But, earnings on the growing funds is the account and withdrawals during retirement are tax-free. Unlike Roth IRAs, contributions to traditional IRAs are tax deductible, but investors must pay taxes on the withdrawals they make from these accounts during retirement.

Which of the following statements best describes the taxation of Roth IRAs:

A. The financial-information management functions's responsibilities have declined in recent years. B. The financial-information management function is an electronic, web-based activity. (C). A financial-information management system can be used to support operations management decisions. D. Data in a financial-information management system are typically at least four to six months old. The answer is C, a financial-information management system can be used to support operations management decisions.

Which of the following statements regarding the financial-information management function is true:

A. The merger typically results in a smaller variety of products and services, lower costs, and reduced consumer risks. (B). More consumer loans may be available from the new larger firm than were available from the smaller, individual firms. C. A merger usually makes it easier to determine which supervisory agency should oversee the new, larger company. D. The merger usually helps financial experts to get an accurate picture of the new, larger firm's financial condition. The answer is B. More consumer loans may be available from the new larger firm than were available from the smaller, individual firms. When multiple financial firms merge, companies that previously had limited funds to lend to consumers may now have more capital available to offer in the form of consumer loans. Mergers allow businesses to offer a wider variety of products and services to better meet customers' needs. Mergers help firms to lower costs, but they may increase consumer risks. If a consumer relies upon the new, larger financial firm to satisfy all of her/his financial needs, s'he faces more risk if and when the firm experiences financial or legal difficulties. It is often difficult for financial experts to get an accurate picture of a large, complex financial conglomerate's current financial condition. A merger is likely to create a large corporation with product offerings that encompass multiple financial sectors. Because the corporation offers products from multiple financial sectors, it is difficult to determine which supervisory agency should regulate and oversee company operations.

Which of the following statements regarding the merger of multiple financial firms is true:

A. property (B). Life C. Liability D. Health The answer is B, life. Life insurance companies are a type of financial intermediary because they receive funds from their customers (savers) and lend the funds to other customers (borrowers). Property, liability, and health insurance companies are not financial intermediaries. Like life insurance companies, they sell their services to customers, but they do not lend funds to borrowers.

Which of the following types of insurance companies serves as a financial intermediary:

A Wikipedia (B). Morningtar C. StandardLine D. Facebook Finance The answer is B, Morningstar. Morningstar is an independent company that provides up-to-date, reliable information and analyses of a variety of securities, including stocks, bonds, and mutual funds. Although Wikipedia contains a wealth of information, it is less likely to be accurate or trustworthy because the content is primarily provided by anonymous internet users. StandardLine does not provide financial information. Facebook Finance is a fictitious web site.

Which of the following web sites is most likely to contain accurate, trustworthy securities information:

(A). Show the business's cash-flow status B. Predict new services to offer customers C. Determine the business's electronic data interchange (EDI) needs D. Identify equipment needing repairs The answer is A, show the business's cash-flow status. Budgeting applications enable businesses to maintain, monitor, and forecast a business's financial status and generate financial reports that can be shared with a business's decision-makers. Expenses, revenue, cash flow, profit/loss, etc., are easily tracked and determined using budgeting applications. Equipment needing repairs, new services to offer customers, and EDI needs are not captured and predicted by budgeting applications.

Which of the following would a small business's budgeting applications most likely be able to do:

A. Regularly attending trade shows for the finance industry (B). Actively participating in a local professional association for the finance industry. C. Occasionally auditing classes at a local postsecondary institution D. Actively attending meetings sponsored by the local chamber of commerce Actively participating in a local professional association for the finance industry. Active participation in a professional organization specific to the finance industry affords finance

Which of the following would afford finance professionals the best opportunity to build long-lasting relationships with other finance professionals:

A. Person's first and last names B. Person's social security number C. Person's zip code (D). Person's individual account number The answer is D, person's individual account number. Databases depend upon keys to store, sort and compare records. A primary key is the unique identifier assigned to a record in a table. When choosing a primary key, database builders need to be sure that the identifier will be unique to an individual. The person's account number would be unique to the individual. Most customers consider their social security numbers to be private information that they do not want entered into databases. In addition, the government can reassign social security numbers upon the death of the owner of a social security number. In addition, some people do not have those numbers if they are not U.S citizens. Zip codes are not unique to an individual or to a location. A person's first and last names may not be unique, e.g., there may be many John Smiths.

Which of the following would be appropriate to use as primary key for identification of

A. Invite the new clients out for dinner and call Mr. Williams in the morning. B. Ask the new clients to take a break so that she can take the call immediately. C. Ask her assistant to handle Mr.s Williams' call and answer his questions. (D). Ask her assistant to inform Mr. Williams that Tobi will return his call at 5:00 p.m. The answer is D. Ask her assistant to inform Mr. Williams that Tobi will return his call at 5:00 p.m An important factor in retaining clients is returning their calls in a timely fashion. By personally responding to Mr. Williams' questions promptly instead of calling him back in the morning or having her assistant answer his questions, Tobi shows him that he is important to her. At the same time, though Tobi needs to show the new clients that she respects them and their time. For that reason, Tobi should finish her meeting with them prior to speaking with Mr. Williams.

While Tobi is in the middle of an important meeting with some new clients, her assistant steps into the room to let Tobi know that her biggest customer, Mr. Williams, is on the phone with some questions about his account. It is 3:30 p.m. What should Tobi do?

A. Contextual (B). Symbolic C. Comparative D. Cross-source The answer is B, symbolic. A virtual auditor uses several different reasoning techniques to evaluate financial activities. Symbolic reasoning looks for "Signatures" - clues - of noncompliance as well as patterns of events such as duplicate journal entries within one accounting period. Contextual reasoning involves determining the seriousness of the noncompliance incident identified by symbolic reasoning. comparative reasoning identifies and compares similar transactions and information. It does not focus on identical transactions such as duplicate journal entries. Cross-source reasoning inspects transactions within multiple financial systems.

While reviewing a business's general ledger, a virtual auditor identified two identical journal entries within the same accounting period. What reasoning technique did the virtual auditor use?

(A). To protect online transactions B. To created credit-cards C. To provide incentives for increased investing D. To overcome government-regulated quotas The answer is A, to protect online transactions. Tokenization is the process of substituting a random number in place of an account number to process the transaction online. In this way, financial institutions are able to protect customer data from fraud. Credit-card creation, provision of incentives, and government-required quotas are not aspects of tokenization.

Why are financial institutions using tokenization?

A. Recognition that the security of transactions is no longer an issue B. Removal of electronic information exchane procedures (C). Passage of laws that recognize electronic documents as legally binding D. Protection of customers rights to privacy. The answer is C, passage of laws that recognize electronic documents as legally binding. As businesses have become ore comfortable with the use of electronic information, their willingness to accept electronic documents as legally binding contracts has also increased. This has been buoyed by the passage of laws recognizing electronic documents and signatures as legally binding. Electronic information exchange procedures have not been removed. These procedures provide a way for people to exchange information electronically. Security remains an issue for online financial-information management. Although the customers'right to privacy is an issue, it has not contributed to the increased use of online technology in financial-information management. Although the customers' right to privacy is an issue, it has not contributed to the increased use of online technology in financial-information management.

Why has online technology's use increased in financial-information management?

(A). To determine the best fit of classifications resulting from multiple models. B. To orient analytic models to the data stored i a data base C. To enhance search engine optimization (SEO) strategies D. To select that analytic model to apply to the data in a database Th answer is A, to determine the best fit of classifications resulting from multiple models. Often, businesses use a variety of models to understand the data in their data bases. When they generate different results from one another, the business applies a meta-learner to figure out which results are best. Search engine optimization (SEO) strategies relate to increasing the number of hits to a web site from search engines. By the time meta-learners are applied, businesses have already selected a variety of analytic models. The meta-learner is not responsible for orienting models to data in a data base.

Why would a meta-learner be used in data mining?

A. To make credit easier to obtain once customers have met the desired criteria (B). To reduce the likelihood that customers will not pay their bills C. To increase their chances of having customers default on their loans D. To increase their reliance on Dun and Bradstreet reports. The answer is B, to reduce the likelihood that customers will not pay their bills. Creditors must protect themselves from customers who fail to pay their bills. They're doing this by more closely examining customers financial statements, determining whether there are cash flow problems that would delay payment, asking for trade references, etc. This is making it more difficult for customers to obtain credit, but the actions help to reduce creditor risk. The goal of the additional surveillance is to decrease the chances of having customers default on their loans, rather than increase them. Creditors are using more stringent methods of verifying a customer's credit than relying on Dun and Bradstreet reports.

Why would creditors during the the tough economic times of the last few years have increased their surveillance of customers' information?

A. obtains information about its competitors B. misinterprets a customer's requests. (C). misrepresents it capabilities to customers. D. partners with another business for financial gain. The answer is C, misrepresents it capabilities to customers. A business that intentionally misrepresents its capabilities to customers is exhibiting dishonest and unethical behavior. Customers are unlikely to return to a business that is dishonest. Misinterpreting a customer's request is a miscommunication problem and doesn't present an ethical issue. Partnering with another business is a common practice. There is not enough information to determine if the partnership has engaged in unethical activities or if the business obtained information to determine if the partnership has engaged in unethical activities or if the business obtained information about its competitors in an unethical way.

A business is behaving unethically if it

(A). Identify trends. B. decrease costs C. reduce inventory. D. achieve quotas The answer is A, identify trends. Statistics are information presented in numerical form. Statistics can be used to identify trends. Trends indicate the general direction which people or events are moving. If numerical data show that the demand for a product has been steadily increasing for several months, then the trend indicates that more people want or need the product. By analyzing this information, the business can determine if it wants to enter a new market. Or, if the business already sells the product, it can use the information to decide if the the business should increase its production of or inventory levels for the product. Although statistics are used to analyze costs, inventory, and quotas, the information provided cannot be used to assess those situations.

A business report provides statistical data indicating that the demand for a specific type of product has been increasing between three and six percent over the past several months. This information is useful to companies to

(A). Full-service broker B. Discount broker C. Beneficiary D. Insurance agent The answer is A, full-service broker. Full-service brokers provide "one-stop shopping" for investors. They Provide a wide variety of financial products and services. Full-service brokers are often desirable for people who require ongoing, comprehensive financial guidance and do not have the time to research investment options in detail. Discount brokers primarily provide the client with basic information about financial products and do not offer advice or conduct in-house research. A beneficiary is an individual or institution that receives specified benefits under certain circumstances such as money from a life-insurance policy upon the insured's death. Although insurance professionals may be employed by full-service brokerage firms, not all insurance agents have the expertise to provide comprehensive financial advice.

Adam wants to hire a financial-services provider who will provide him a wide variety of services, such as recommending insurance coverage, providing in-depth financial advice, and making investments on his behalf. What type of financial-services provider would be best suited to handle Adam's needs?

A. CLOSE B. DIV. C. VOL. (D). 52-Week HI/LO The answer is D, 52-Week HI/LO. The highest and lowest prices paid during the past year can be used to learn how volatile a stock is. If the range between the lowest and highest prices is large, then the stock's price has risen or fallen sharply in the past year. Such a stock would be considered volatile. The stock's dividend, volume, and closing price are much less reliable indicators of a stock's volatility.

An investor using a securities table can learn about a stock's volatility by checking the stock's

A. Bibliography B. Appendices C. Analysis (D). Table of contents The answer is D, Table of contents. When trying to locate specific information from a lengthy document or a book, it often saves time to first look at the table of contents. The table of contents is the portion of the text in which the sections are listed with their page numbers for easy access. For example, if Brandon wants to obtain information about industry trends, he can look at the table of contents, find the section that discusses trends, and turn to the designated page of the document to read the desired information. The bibliography contains the citations or sources used to construct the primary document. The appendices are the segments added to the end of the primary document that include supporting information. Some research reports contain an analysis of the document's contents or research. by looking at the table of contents, the reader can determine if the desired information is included in the appendices or analysis sections of the report.

Brandon has been give a 385-page report and does not have time to review the entire document, but he does need to understand specific information that is included in the report. What section of the report will guide Brandon to the information he needs?

A. limits on foreigners' access to domestic markets B. investors' exposure to business cycle risks. C. taxes on international transactions. (D). herd behavior among investors. The answer is D, herd behavior among investors. Although financial globalization tends to increase investors access to many different financial markets, financial globalization also seems to increase the risks of speculative bubbles and herd behavior among investors. Herd behavior involves individuals who act together as a group without any planned direction. It is usually irrational and driven by emotions. In good times, investors hurry to join others in a buying frenzy. But, in bad financial times, fearful investors join others in a rush to get out of risky markets. By diversifying their funds in many different countries, investors are able to diversify their risk and reduce their exposure to business cycle risks. To enable capital to flow more freely across their national borders, many countries have lowered their taxes on international financial transactions.

Financial globalization tends to cause an increase in

A. They are able to overcome economies of scale. (B). They can obtain faster responses to queries. C. They no longer have to generate consistent data D. They can rely on old data. The answer is B, they can obtain faster responses to queries. Since data are housed in one location, querying the data is faster, thereby improving organizational efficiency. Having a central depository ensures that data from different applications are combined into one common storage area which increases the speed with which queries can be run. Using a central repository for financial information enables businesses to achieve economies of scale rather than overcoming them. They also have access to more consistent, up-to-date information rather than relying on old data.

How can businesses benefit from using a central data repository for its financial information?

A. By comparing yearly volume with on-hand quantity for stock item B. By isolating entries against authorization records for new or terminated employees. C. By comparing vendor payables posted to purchase orders (D). By comparing employee phone numbers and addresses to vendor information for payables. The answer is D, by comparing employee phone numbers and addresses to vendor information for payables. A conflict of interest is any relationship that is, or appears to be , not in the business's best interest. It would prevent someone from performing her/his duties and responsibilities objectively. To spot probable conflicts of interest, businesses can use their financial analysis applications to cross check employee data with that of vendors. The other examples can be used to analyze financial data for other purposes.

How could financial analysis applications be used to identify possible conflicts of interest?

A. $577.16 (B). $598.84 C. $564.22 D. 582.24 The answer is B, $598.84. Most countries have their own currency. A country's currency value fluctuates in relation to other countries' currency values. Businesses monitor these fluctuations because dramatic changes in currency values can affect their profits. To calculate the amount that you would pay in U.S. dollars, multiply the price of the product in Canadian dollars by the value of the U.S. dollar ($624.60 x .958750 = $598.835 or $598.84).

If one Canadian dollar is equal to .958750 U.S. dollar, how much would you pay for an item that costs $624.60 Canadian dollars in U.S. dollars?

A. Subtle (B). persuasive C. indifferent D. resistant. The answer is B, persuasive. Change doesn't just happen on its own. To lead change, change leaders need to be persuasive- they must be able to get others withing their organizations to see things their way, do things their way, or agree with them. Subtle and indifferent (uncaring) attitudes don't usually prompt resistant people to embrace change.

If you are going to successfully lead change within your organization, you need to be

A. Application charge (B). Late fee C. Processing charge D. Over-limit fee The answer is B, late fee. Credit card issuers often charge late fees for payments that do not arrive on time. Some credit-card issuers charge application fees, which involves billing a customer for applying for credit. Processing fees are charges to complete certain activities. Over-limit fees are charges applied for credit transactions that go over or exceed the credit-card holders credit limit.

On January 3, Anna mailed her credit-card payment, which was due on January 5. The credit card issuer received the payment on January 7. What most likely appeared on Anna's credit card statement the following month?

(A). providing an incentive. B. taking over their activities. C. removing unexpected obstacles. D. delegating her responsibilities. The answer is A, providing an incentive. An incentive is something that will fulfill a desire or need. Incentives often help motivate team members to finish a project or perform a task, which helps the business achieve its goals. Incentives ma include anything from a free lunch and comp time to a large bonus. Taking over activities and delegating responsibilities do not necessarily motivate others to take a certain course of action. And, while it would be nice to be able to remove unexpected obstacles, it's not possible to do so.

One way for Sidney to motivate her team members to accomplish a certain goal in a specific amount of time is by

A. Pedro Sanchez (B). MON Company C. Mrs. Jones D. City of Smithsville The answer is B, MON company. The debtor is the individual or business that owes money to another individual or business, which is the creditor. In the situation presented, MON Company is the creditor because the company has the finances to extend credit to Mrs. Jones (the debtor), allowing her to pay later. Pedro Sanchez is an employee of the creditor. The location of the company is not a factor in determining the debtor-creditor relationship.

Pedro Sanchez works as a loan processor for the MON company, which is located in Smithsville. Pedro has recently approved an application to extend a $10,000 line of credit to Mrs. Jones. Who is the creditor in this situation?

A. Regression B. Estimation (C). Clustering D. Prediction The answer is C, clustering. Clustering involves dividing customers in a database into groups based on their similarities and differences. Estimation is used to determine a value for an unknown variable such as a sales forecast. Regression involves using existing values to forecast what continual values will be. Prediction uses historical data to build a model to forecast future customer behavior.

Rather than studying individual customer data, First Bell Bank is interested in analyzing groups of customers. Members of a group should be similar and markedly different from other customer groups. Which of the following Customer Relationship Management (CRM) activities should be used to prepare First Bell Bank's customer data for analysis:

A. Years of college education B. Years of experience in the career field (C). Years worked at current job. D. Years of good performance at the current job The answer is C, years worked at current job.

Smith Company typically promotes employees based on seniority. To do this, which of the following pieces of information would Smith Brothers need for each employee:

(A). convergence B. consolidation C. tactical planning D. Licensing The answer is A, convergence. Convergence occurs when financial providers from different financial sectors (e.g., banking services and insurance) merge. Consolidation takes place when financial providers within the same institutional category merge. For example, if two banks were to merge, they would be consolidating their companies. Tactical planning is short-range planning (one year) of specific actions the business will take. Two businesses should look much further ahead than just one year before making the decision to merge. Licensing is a business structure that requires the authorization or permission from an owner of another entity to use trademarked, copyrighted, or patented material for a specific activity, during a specific time period, for the profit of both parties. Businesses that enter into licensing agreements do not merge.

The Money for You Bank recently merged with the Keeping You Safe Insurance Company. The merger is an example _____________ in the finance industry.

A. Matching aptitudes to careers leads to the highest possible income. (B). Considering your aptitudes will make achieving your career goals realistic. C. A positive aptitude will allow you to succeed in any career. D. Selecting a career based on your aptitudes will require less time in college. The answer is B, considering your aptitudes will make achieving your career goals realistic. An aptitude is your potential for learning a skill. It is similar to having a knack for something. Pursuing a career in an area that comes naturally to you will make it more realistic to achieve your career goals. Though matching aptitudes to a career is likely to lead to career success and satisfaction, it does not consider income. Aptitudes are neither positive nor negative. Each person has a different set of aptitudes. Time spent in college is not necessarily affected by aptitude. As an example, although a person has an aptitude for medicine, s/he must still complete college and medical school.

Why is it important to select an occupation that matches your aptitudes?