The type of option that does not have the backing of stock is called a(n):
Correct Answer: C
A naked or uncovered option is a call option that does not have the backing of stock. Thus, the option writer will have to purchase the underlying stock if the call option is exercised.
Question 102
The e-commerce project that an auditor is most likely to assess as having the lowest risk is one that:
Correct Answer: A
The following are a few issues that an internal auditor should consider when undertaking an e-commerce engagement and assessing risks: Is there a business plan for the e-commerce project or program? Does the plan cover the integration of the planning, design, and implementation of the commerce system with the strategies of the organization? Have governmental and regulatory requirements been analyzed and considered? How secure is the hardware and software, and will they prevent or detect unauthorized access, inappropriate use, and other harmful effects and losses? Will transaction processing be current, accurate, complete, and indisputable? . Does the risk assessment include internal and external forces? If outside vendors are used, has a "going concern" evaluation been conducted by a trusted third party who is qualified to certify the vendor? If vendors provide hosting services, do they have a tested business contingency plan? Have they provided a recent SAS-70 report? Also, have privacy issues been resolved? Based on how well the e-commerce project addresses these questions, the project likely to receive the lowest risk assessment is one that has a business plan that covers the integration of the planning, design, and implementation of the e-commerce system with the strategies of the organization.
Question 103
To keep costs at a minimum and decrease the completion time by 1-1/2 days, Networks, Inc. should crash activity)
Correct Answer: A
The critical longest) path is A-D-E, which has an expected time of 13 days 5.5 +7.5). However, to decrease the project's completion time by 1.5 days, paths A-B-C-E 4.5 + 1.0 + 6.5 = 12 days) and A-B-D-E 4.5 + .5 + 7.5 = 12.5 days) as well as A-D-E must also be shortened. Hence, A-D-E must be reduced by 1.5 days, A-B-C-E by .5 day, and A-B-D-E by 1.0 day. The only way to decrease A-D-E by 1.5 days is to crash activity. AD 5.5 expected time -4.0 crash time = 1.5 days). Crashing DE results in a 1.0-day saving 7.5 - 6.5) only. Crashing AB is the efficient way to reduce both A-B-C-E and A-B-D-E by the desired amount of time because it i s hart of both paths. The incremental cost of crashing AB is U $1,000 US $4,000 crash cost - US $3,000 normal cost) to shorten the completion time by 1.0 day 4.5 - 3.5). The alternatives for decreasing both A-B-C-E and A-B-D-E are more costly.
Question 104
During which of the following phases of contracting does the organization analyze whether the market is aligned with organizational objectives?
Correct Answer: A
Question 105
In a theory of constraints (TOC) analysis, the bottleneck operation (the constraint) corresponds to which part of the drum-buffer-rope model?
Correct Answer: B
Production flow through a constraint is managed using the drum-buffer-rope (DBR) system. The drum (i.e., the beat to which a production process marches) is the bottleneck operation. The constraint sets the pace for the entire process. The buffer is a minimal amount of work-in-process input to the drum that is maintained to ensure that it is always in operation. The rope is the sequence of activities preceding and including the bottleneck operation that must be coordinated to avoid inventory buildup.
