Risk and Procedures for Control Paper 19

1

Which of the following is not a technique for identifying events in an enterprise risk management program?






2

Devon Company is using an enterprise risk management system. Management of the company has set the company’s objectives, identified events, and assessed risks. What is the next step in the enterprise risk management process?






3

Which of the following is not an advantage of establishing an enterprise risk management system within an organization?






4

Kelly, Inc. is considering establishing an enterprise risk management system. Which of the following is not a limitation of such a system?






5

If an investment is expected to be held for a long period of time the preferred method of calculating the expected return is






6

Which of the following expresses the relationship between risk and return?






7

The expected return of a portfolio is measured by the






8

Russell Inc. is evaluating four independent investment proposals. The expected returns and standard deviations for each of these proposals are presented below.
Investment proposal Expected returns Standard deviation
I 16% 10%
II 14% 10%
III 20% 11%
IV 22% 15%
Which one of the investment proposals has the least relative level of risk?






9

Natco has the following investment portfolio.
Expected return Investment Beta
Investment A 15% $100,000 1.2
Investment B 10% $300,000 -0.5
Investment C 8% $200,000 1.5
Investment D 8% $100,000 -1.0
What is the expected return of the portfolio?






10

Natco has the following investment portfolio.
Expected return Investment Beta
Investment A 15% $100,000 1.2
Investment B 10% $300,000 -0.5
Investment C 8% $200,000 1.5
Investment D 8% $100,000 -1.0
If management decided to sell one of the investments, which one should be selected?






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