Which of the Following Statements BEST Describes the Need for Global

question 40

Multiple Choice

Which of the following statements BEST describes the need for global accounting standards?

• A) The complexity of the global market increases the risk of unethical accounting behavior by allowing accountants to choose which national GAAP standards are best for their clients.
• B) The rise of the global market increases the risk of money laundering and offshore accounting.
• C) The rise of the global market increases the risk of fraudulent business transactions across borders.
• D) The rise of the global market increases the risk of international dumping and profit-skimming.
• E) The rise of the global market increases the risk of the creation of dummy companies and accounts for the purpose of dumping toxic assets.

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Definitions:

Market Risk Premium

The difference between the expected return on a market portfolio and the risk-free rate.

Risk Aversion

The preference for lower risk options over higher risk ones, even if the latter could result in higher returns.

Security Market Line

A representation in finance that shows the expected return of investments at different levels of risk, based on the capital asset pricing model (CAPM).

Beta

A gauge of the variability of a stock's value relative to the comprehensive market.