In Order to Master Risks and Controls and How They

question 21

Multiple Choice

In order to master risks and controls and how they fit together, which of the following is NOT one of the areas to fully understand?

• A)The accounting information system
• B)The description of the general and application controls that should exist in IT system
• C)The type and nature of risks in IT systems
• D)The recognition of how controls can be used to reduce risk

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Definitions:

Cost of Debt

The actual rate at which a corporation incurs cost on its existing financial obligations, such as bonds and loans.

Debt/Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets, often used to assess financial leverage.

Cost of Debt

The cost of debt is the effective interest rate a company pays on its debts, including loans and bonds, accounting for tax benefits.

Equity Financed

Refers to raising capital for a company through the sale of shares in the company to investors.