Probability Proportionate to Size (PPS) Sampling Is _______

question 142

Multiple Choice

Probability Proportionate to Size (PPS) sampling is _______.

• A)an approach that uses attribute sampling theory to express a conclusion in dollar amounts
• B)an approach that uses non-statistical sampling theory to express a conclusion in dollar amounts
• C)rarely used in auditing, due to its prohibitive cost
• D)required to be used in the auditing of publicly traded companies

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, often reflective of the cost of capital or rate of return required.

Beta

A measure of a stock's volatility in relation to the overall market. A beta greater than 1 indicates a stock is more volatile than the market, while a beta less than 1 suggests it is less volatile.

Risk-Free Rate

The anticipated financial gain from an investment devoid of any risk, frequently indicated by the yields of government bonds.

After-Tax Cost of Debt

The net cost of debt after accounting for the tax deductions available on interest payments.