Question 1

Which of the following controls could an internal auditor reasonably conclude is effective by observing the physical controls of a large server room?

Options :

A : Adequate signs are in place to assist in locating safety equipment.

B : Servers are secured individually to their racks by locks.

C : Foam fire extinguishers are operable to protect against electrical fires.

D : Swipe card access is required to gain access to the server room.

Answer: A

Question 2

A capital investment project will have a higher net present value, everything else being equal, if it has:

Options :

A : A higher initial investment level.

B : A higher discount rate.

C : Cash inflows that are larger in the later years of the life of the project.

D : Cash inflows that are larger in the earlier years of the life of the project.

Answer: D

Question 3

Which of the following is a characteristic of just-in-time inventory management systems?

Options :

A : Users determine the optimal level of safety stocks.

B : They are applicable only to large organizations.

C : They do not really increase overall economic efficiency because they merely shift inventory levels further up the supply chain.

D : They rely heavily on high quality materials.

Answer: D

Question 4

Which type of bond sells at a discount from face value, then increases in value annually until it reaches maturity and provides the owner with the total payoff?

Options :

A : High-yield bonds.

B : Commodity-backed bonds.

C : Zero coupon bonds.

D : Junk bonds.

Answer: C

Question 5

The first stage in the development of a crisis management program is to:

Options :

A : Formulate contingency plans.

B : Conduct a risk analysis.

C : Create a crisis management team.

D : Practice the response to a crisis.

Answer: B

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