Which of the Following Is a Risk Assessment Principle

question 129

Multiple Choice

Which of the following is a risk assessment principle?

• A) accountability
• B) use relevant, quality information to support the functioning of internal controls
• C) consider the potential for fraud
• D) develop general controls over technology

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Definitions:

Arbitrage Opportunity

This refers to the chance to buy an asset at a low price in one market and simultaneously sell it at a higher price in another, realizing a profit without risk.

Expected Return

The weighted average of all possible returns from an investment, factoring in the probabilities of each outcome.

Firm-characteristic Variables

Factors specific to a company that can influence its stock price, such as size, earnings, and debt levels.

Risk Premiums

The additional return that an investor expects to receive for taking on additional risk.