Two Important Limitations of Internal Control Systems Are (1) Human

question 108

True/False

Two important limitations of internal control systems are (1) human error or human fraud, and (2) cost-benefit.

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Definitions:

Obligation To Sell

A commitment or requirement to sell an asset or security, often arising from a contractual agreement.

Protective Put

An investment strategy where an investor buys a put option for an asset they own to hedge (protect) against a potential drop in the asset's price.

Riskless Asset

An investment with a certain rate of return and no risk of default, often represented by treasury bills or similar government securities.

Exercise Price

The price at which the option holder can buy (call option) or sell (put option) the underlying asset.