Which of the Following Is NOT True of a Sound

question 9

Multiple Choice

Which of the following is NOT true of a sound system of internal control?

• A) Implementation of controls involves costs.
• B) A sound system of internal control is the responsibility of management.
• C) Through it, errors and irregularities will be eliminated.
• D) It prevents collusion between employees.

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Definitions:

Market Yield

The current yield of a bond or other fixed-income security, calculated by dividing the annual interest income by the current market price.

Par-Value

The face value of a bond or stock as stated by the issuer, which is typically the amount repaid at maturity for bonds.

Modified Duration

A formula used to determine the sensitivity of a bond's price to a 1% change in interest rates, indicating the percentage change in price for each percentage point change in yields.

Market Yield

The current annual income returned on an investment, measured as a percentage of the investment's market price.