Which One of the Following Statements Is NOT Correct

question 145

Multiple Choice

Which one of the following statements is NOT correct?

• A) It is acceptable for auditors to use statistical sampling methods.
• B) The primary benefit of statistical sampling methods is the quantification of sampling risk.
• C) An advantage of using statistical sampling is that the cost/benefit ratio is always positive.
• D) It is acceptable for auditors to use non-statistical sampling methods.

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Definitions:

CAPM

Capital Asset Pricing Model, a financial model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Marginal Price

This is the cost of producing one additional unit of a good or service.

Zero-Beta Security

A financial instrument whose returns are not correlated with those of the market, meaning it has a beta of zero, thus not contributing to portfolio volatility.

Expected Return

The probability-weighted average of the possible outcomes.