If from Last Year to the Current Year's Audit,inherent Risk

question 13

Multiple Choice

If from last year to the current year's audit,inherent risk has stayed constant but control risk is higher (it is more likely that controls do not detect material errors) ,what is the likely effect on detection risk?

• A)Detection risk will increase.
• B)Detection risk will decrease.
• C)Detection risk will stay the same.
• D)Detection risk will need less documentation.

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Definitions:

Comparable Bonds

Bonds that are similar in terms of interest rate, maturity, and credit quality, used as a benchmark to evaluate the value of other bonds.

Market Interest Rate

The market interest rate is the rate of interest that is commonly charged or paid on loans and bonds in the current market.

Coupon Rate

The interest rate paid by a bond issuer on the bond's face value, determining the periodic interest payments to bondholders.

Semiannually

Occurring twice a year; typically refers to payments, interest calculations, or periods within a financial context.