Numerous Accounting Scandals and Misrepresentation of Financial Results Have Been

question 110

Multiple Choice

Numerous accounting scandals and misrepresentation of financial results have been reported in the news during the past few years. As a result the SEC recently has:

• A) taken over responsibility for setting accounting rules in the United States.
• B) required companies to issue monthly reports on financial data.
• C) required companies to have two different accounting firms audit the financial statements included in the annual report on Form 10-K.
• D) introduced severe fraud charges for managers found guilty of such actions.

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Definitions:

Portfolio

A portfolio consists of various financial assets such as shares, bonds, commodities, liquid cash, and equivalents like mutual funds and exchange-traded funds (ETFs).

Stock B

Typically a classification indicating a type of stock with specific rights or characteristics, such as differing voting rights from Stock A in the same company.

Market Risk Premium

The extra profit an investor is aiming for by choosing to invest in a market portfolio that carries risk instead of opting for assets devoid of any risk.