Internal Control Procedures

question 140

Multiple Choice

Internal control procedures:

• A) Eliminate the risk of loss.
• B) Include policies and procedures to safeguard assets.
• C) Prevent unavoidable losses.
• D) Both eliminate the risk of loss and include policies and procedures to safeguard assets.
• E) All of the above

Comprehend the calculation and significance of expected value in risk assessment.

Distinguish between true and false statements regarding portfolio mean and variance.

Understand the impact of investment size on the expected value of a risky investment.

Learn how to calculate the standard deviation of a portfolio's returns.

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Definitions:

Business Risk

The potential for financial loss in operating a business, arising from factors such as changes in market demand, costs, competition, and regulatory environment.

Entrepreneurs

Individuals who start, organize, and manage new business ventures, taking on financial risks in the hope of profit.

Earthquake Insurance

A type of property insurance that covers damage to a building and its contents caused by seismic activities.

Tolerance for Risk

The degree to which an individual or organization can withstand risk, particularly in investment, without experiencing adverse effects.