EQs Flashcards
Compensating Balance
Compensates a financial institution for services rendered by providing it with deposits of funds.
Financial institutions require minimum balances (1) for certain levels of service or (2) as a requirement of loan agreements. Such minimums are referred to as compensating balances.
Sensitivity Analysis
involves exploring “what if” situations to determine the variables to which the outcomes are particularly sensitive. Management can then challenge its assumptions about these sensitive variables.
The 7 Components of COSO’s ERM Framework
(1) internal environment, (2) objective setting, (3) event identification, (4) risk assessment, (5) risk response, (6) control activities, (7) information and communication, and (8) monitoring.
A data warehouse is an example of
Online analytical processing
a data warehouse is an approach to online analytical processing that combines data into a subject-oriented, integrated collection of data used to support management decision-making processes.
The objective of safeguarding of assets is a subset of which of the following objectives?
Reporting.
Compliance.
Fraud.
Operations.
D. Operations
One of the benefits of a single integrated database information system is
Increased data accessibility.
This question is based on the following information.
Total units of product Average fixed cost Average variable cost Average total cost
6 $15.00 $25.00 $40.00
7 12.86 24.00 36.86
8 11.25 23.50 34.75
9 10.00 23.75 33.75
The marginal cost of producing the ninth unit is
Ans. $25.75
This answer is correct. Marginal cost is the additional cost of producing one more unit. The amount may be obtained by subtracting the total cost of 9 units from the total cost of 8 units.
Which of the following rates is most commonly compared to the internal rate of return to evaluate whether to make an investment?
Short-term rate on US
Treasury bonds.
Prime rate of interest.
Weighted-average cost of capital.
Long-term rate on US Treasury bonds.
WACC
Humped Yield Curve
A humped curve would mean inflation is expected in the intermediate period but is expected to moderate in the long run.
Downward Sloping Yield Curve
Downward sloping would mean inflation is expected to moderate over the intermediate and long run.
Upward Sloping Yield Curve
If the yield curve is upward sloping, long-term rates are higher than short-term rates, including a belief that inflation will increase.
Flat Yield Curve
would imply that inflation is expected to stay the same as it is currently.
