The Tolerable Deviation Rate _______

question 3

Multiple Choice

The tolerable deviation rate _______.

• A)is the maximum rate of deviation from a prescribed control that an auditor is willing to accept and still use the planned assessed level of control risk
• B)is the minimum rate of deviation from a prescribed control that an auditor is willing to accept and still use the planned assessed level of control risk
• C)refers to the extent that audit fees can go over the roughly agreed amount
• D)relates to how many immaterial misstatements the auditor finds

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Definitions:

Warrants

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a stock at a specified price before a certain date.

Conversion Price

The price per share at which a convertible security, such as convertible bonds or preferred shares, can be converted into common stock.

Semi-Annually

A term indicating something that happens twice a year or every six months.

Straight Bond Value

The value of a bond that does not have any embedded options, calculated by considering its coupons and principal repayment, discounting back at an appropriate yield rate.