After the Auditor Has Completed Test of Controls and Drawn

question 57

Multiple Choice

After the auditor has completed test of controls and drawn a conclusion about control risk, _______.

• A)the auditor will want to make decisions about the nature, timing and extent of substantive testing
• B)the auditor will want to make decisions about the nature of substantive testing
• C)the auditor will want to make decisions about the timing of substantive testing
• D)the auditor will want to make decisions about the extent of substantive testing

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Definitions:

Book Value

The net value of a company's assets minus its liabilities, often used to assess the company's worth on its balance sheet.

Risk Premiums

The additional return over the risk-free rate that investors require to compensate for the extra risk of an investment.

Expected Returns

The anticipated profitability or yield an investment is projected to generate under normal circumstances.

Systematic Risk

The risk inherent to the entire market or market segment, also known as market risk, which cannot be eliminated through diversification.