Based on Audit Evidence Gathered and Evaluated, an Auditor Decides

question 42

Multiple Choice

Based on audit evidence gathered and evaluated, an auditor decides to increase the assessed level of control risk from that originally planned. To achieve an overall audit risk level that is substantially the same as the planned audit risk level, the auditor would:

• A)decrease substantive testing.
• B)decrease detection risk.
• C)increase inherent risk.
• D)increase materiality levels.

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Definitions:

Coupon Rates

Interest rates specified on bonds or other fixed-income securities that issuers promise to pay bondholders annually, expressed as a percentage of face value.

Convertible Bonds

Bonds that can be converted into a predetermined amount of the company's equity at certain times during their life, usually at the discretion of the bondholder.

Yield To Maturity

The total return anticipated on a bond if it is held until its maturity date, accounting for interest payments and the capital gain or loss.

Current Yield

Current yield refers to the annual income (interest or dividends) received from an investment, expressed as a percentage of the investment's current market price.