Inherent Risk and Control Risk

question 19

Multiple Choice

Inherent risk and control risk

• A) are inversely related to each other.
• B) are inversely related to detection risk.
• C) are directly related to detection risk.
• D) are directly related to audit risk.

---

Definitions:

Generalization

The process of forming general concepts from specific instances by abstracting common properties.

Expected Growth Rate

The anticipated rate at which an investment, company, or economy will grow in a specific period.

Required Return

The minimum expected return by investors for investing in a particular security or project, considering the risk involved.

Dividend

A share of profits paid by a company to its shareholders, typically on a regular basis.