Most municipal and corporate bonds are rated by an independent rating firm such as Standard & Poor's (S&P) or Moody's. These ratings provide investors with information regarding the risk of default on the bond issue. The higher rated bonds are considered .
Answer(s): A
Auditors should be aware that the investment objectives of a mutual fund are usually based on a risk profile outlined in the fund prospectus. For example, aggressive growth funds may invest in highly volatile stock issues and a money market fund may invest in low risk money market instruments. Other funds have investment objectives based on the type or location of companies they invest in, such as:
Answer(s): B
Risks related to assets/liability management that auditors should be aware of include all of the following EXCEPT:
Answer(s): D
The management of index funds is than the management of non-index funds, because an index fund manager only needs to track a relatively fixed index of securities.
A mutual fund that invested primarily in utility companies and bonds would be an example for an income mutual fund. Which of the following risk/s is/are NOT associated with bond funds?
Answer(s): C
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