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NEW QUESTION: 1
The risk of incorrect acceptance and the likelihood of assessing control risk too low relate to the:
A. Efficiency of the audit.
B. Preliminary estimates of materiality levels.
C. Allowable risk of tolerable misstatement.
D. Effectiveness of the audit.
Answer: D
Explanation:
Explanation/Reference:
Explanation:
Choice "D" is correct. Both the risk of incorrect acceptance and the risk of assessing control risk too low
relate to the effectiveness of an audit in detecting an existing material misstatement.
Choice "A" is incorrect. Allowable risk of tolerable misstatement does not exist.
Choice "B" is incorrect. The risk of incorrect acceptance and risk of assessing control risk too low are
unrelated to preliminary estimates of materiality.
Choice "C" is incorrect. The efficiency of the audit is related to the risk of incorrect rejection and the risk of
assessing control risk too high.
NEW QUESTION: 2
Which of the following statements is INCORRECT according to CAPM:
A. expected returns on an asset will equal the risk free rate plus a compensation for the additional risk measured by the beta of the asset
B. the return expected by investors for holding the risky asset is a function of the covariance of the risky asset to the market portfolio
C. securities with a higher standard deviation of returns will have a higher expected return
D. portfolios on the efficient frontier have different Sharpe ratios
Answer: C
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Answer: C
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