A Management Representation Letter Is a Written Statement from a Non-

question 4

Multiple Choice

A management representation letter is a written statement from a non- independent source and therefore:

• A) can be regarded as sufficient evidence only if the auditor finds a strong internal control system.
• B) needs to be confirmed by an outside independent source such as a financial institution or law firm.
• C) can be regarded as sufficient evidence if the high- level corporate officials who sign it are trustworthy.
• D) cannot be regarded as sufficient evidence.

---

Definitions:

T-Bills

Short-term debt securities issued by the U.S. Treasury to finance government spending, seen as low-risk investments.

Market Portfolio

A theoretical bundle of investments that contains all available assets in the market, representing the entire investment universe at a given time, used in financial theory to model returns.

Jensen's Measure

A performance evaluation tool that measures the excess return a fund generates over its expected return, given its risk level.

Risk-Free Return

The return on an investment that is guaranteed not to result in any loss, often associated with government securities.