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NEW QUESTION: 1
Martin Hagemann, CFA, works for a large brokerage firm in Frankfurt, Germany. Hagemann has been hired by Tryssen AG, a global research-based company that is preparing to go public after a long history of operating privately. The need to raise substantial amounts of capital to fund research and development activities is seen as the key motivation for the change in policy. Tryssen is engaged in the discovery, development, manufacture, marketing, and sale of medical products.
Hagemann's first task is to recommend an exchange upon which Tryssen stock can be traded. One possibility is the Deutsche Bourse. The Deutsche Bourse operates primarily as a continuous order-driven system. Another alternative that Tryssen is considering is to list on a different exchange that operates as a price-driven system.
As an alternative, Tryssen may choose to list as an American Depository Receipt (ADR). ADRs are negotiable U.S. securities that usually represent a non-U.S. based company's publicly traded equity.
Although typically denominated in U.S. dollars, depository receipts can also be denominated in euros.
Depository receipts can be eligible to trade on all U.S. stock exchanges as well as on many European stock exchanges.
The increasing demand for depository receipts is driven by the desire of individual and institutional investors to diversify their portfolios, reduce risk and invest internationally in the most efficient manner possible. While most investors recognize the benefits of global diversification, there are many challenges presented when investing directly in local trading markets. Obstacles can include inefficient trade settlements, uncertain custody services, and costly currency conversions. Depository receipts overcome many of the inherent operational and custodial hurdles inherent in international investing. Tryssen has decided to access the U.S. market by involving itself in an ADR program. Tryssen has decided to save itself a lot of trouble, however, by not complying with SEC registration and reporting requirements.
As an alternative to ADRs, investors interested in increasing their exposure to international investments can choose to acquire exchange traded funds (ETFs). Hagemann researches the advantages and disadvantages of ETFs.
Execution costs are always a concern, and perhaps even more so for international investors. At the present time, Tryssen AG is most concerned with how reliably it can estimate trading costs. As part of the cost estimation process, Hagemann is asked to provide a report on the advantages and disadvantages of techniques used to reduce execution costs.
Trysse AG proceeds to list on the Frankfurt exchange, and a U.S. affiliate of Hagemann's company starts to aggressively promote the stock. A U.S. investor buys 200 shares of Tryssen at a price of €20 per share.
At time of purchase, the exchange rate is €1 = $1.15. One month later Tryssen pays a dividend of €0.25 per share, and investors are subject to a withholding tax of 20%. The U.S. investor is eligible to claim a tax credit of $0.06 per share. At the time the dividend was paid, the shares had jumped to €24 each and the
U.S. dollar had weakened to €1 = $ 1.20. The shares were sold just after the dividend was paid.
Which type of ADR is Tryssen most likely to undertake?
A. Sponsored Level II ADR.
B. Sponsored Level I ADR.
C. Sponsored Level III ADR.
Answer: B
Explanation:
Explanation/Reference:
Explanation:
Since Trysscn is involved in rhe ADR program, this is a sponsored ADR. However, since there is no compliance with SEC registration and reporting requirements, this is a Level 1 sponsored ADR where shares can only be traded over the counter but not on NASDAQ. Sponsored ADRs that comply with SEC registration and reporting requirements are classified as either Level 2 (where shares can be listed on an official U.S. exchange or on NASDAQ) or as Level 3 (capital may be raised in the United States via a public offering of the ADRs). (Study Session 10, LOS 34.e)
NEW QUESTION: 2
An IS auditor finds that user acceptance testing of a new system is being repeatedly interrupted as defect fixes are implemented by developers. Which of the following would be the BEST recommendation for an IS auditor to make?
A. Only retest high priority defects
B. Consider feasibility of a separate user acceptance environment
C. implement a source code version control tool
D. Schedule user testing to occur at a given time each day
Answer: B
Explanation:
Explanation/Reference:
Explanation:
A separate environment or environments is normally necessary for testing to be efficient and effective, and to ensure the integrity of production code, it is important that the development and testing code base be separate. When defects are identified they can be fixed in the development environment, without interrupting testing, before being migrated in a controlled manner to the test environment. A separate test environment can also be used as the final staging area from which code is migrated to production. This enforces a separation between development and production code. The logistics of setting up and refreshing customized test data is easier if a separate environment is maintained. If developers and testers are sharing the same environment, they have to work effectively at separate times of the day. It is unlikely that this would provide optimum productivity. Use of a source code control tool is a good practice, but it does not properly mitigate the lack of an appropriate testing environment. Even low priority fixes run the risk of introducing unintended results when combined with the rest of the system code. To prevent this, regular regression testing covering all code changes should occur. A separate test environment makes the logistics of regression testing easier to manage.
NEW QUESTION: 3
PGP, SSL, and IKE are all examples of which type of cryptography?
A. Hash Algorithm
B. Secret Key
C. Digest
D. Public Key
Answer: D
Explanation:
Explanation/Reference:
Public-key algorithms are fundamental security ingredients in cryptosystems, applications and protocols.
They underpin various Internet standards, such as Secure Sockets Layer (SSL),Transport Layer Security (TLS), S/MIME, PGP, Internet Key Exchange (IKE or IKEv2), and GPG.
References: https://en.wikipedia.org/wiki/Public-key_cryptography
NEW QUESTION: 4
A. VMXNET5
B. Flexible
C. VMXNET3
D. Vlance
E. E1000e
Answer: C
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