Which of the Following Does Not Have to Be Considered

question 86

Multiple Choice

Which of the following does not have to be considered in determining the initial sample size of a test of details?

• A) tolerable misstatement
• B) acceptable risk of incorrect rejection
• C) estimate of misstatements in the population
• D) inherent risk

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Definitions:

Moral Hazard

A situation in economics where one party is willing to take risks because the costs that could result will not be borne by that party.

Behavior Alteration

The modification or change in individual or group behaviors, often initiated by interventions or environmental modifications.

Asymmetric Information

A situation where one party to a market transaction has more information about a product or service than the other. The result may be an under- or overallocation of resources.

Adverse Selection

A situation in insurance and finance where individuals with higher risks are more likely to purchase or participate in a plan, leading to higher than expected costs for insurers or lenders.