Compared to the CAPM, the APT Has an Advantage: the Model

question 16

Multiple Choice

Compared to the CAPM, the APT has an advantage: the model adds factors until the unsystematic risk of any security is uncorrelated with the unsystematic risk of every other security.

• A)As a result, unsystematic risk steadily falls as the number of securities in the portfolio
• Increases.
• B)systematic risks do not decrease as the number of securities in the portfolio increases.
• C)A and B are both correct.
• D)A and B are both incorrect.
• E)Only B separates the APT from the CAPM.

Recognize the accounting treatment and classification of intangible assets.

Determine the cost of newly constructed assets and the inclusion of various expenses in their cost.

Match accounts with the appropriate section of financial statements.

Calculate depreciation, amortization, and adjustments related to asset repairs and improvements.

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Definitions:

Cash Short and Over

An account that tracks discrepancies between the expected cash amount and the actual amount received or disbursed.

Control Environment

The set of standards, processes, and structures that provide the foundation for carrying out internal control across the organization, influencing the overall attitude, awareness, and actions concerning the internal control system and its importance to the entity.

Internal Control

Processes and procedures implemented by an organization to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Reasonable Assurance

A level of confidence that the controls in place in an organization are adequate to mitigate risks to an acceptable level.