As Generally Conceived, the Audit Committee of a Publicly Held

question 35

Multiple Choice

As generally conceived, the audit committee of a publicly held company should be made up of:

• A)representatives of the major equity interests (preferred stock, common stock).
• B)the audit partner, the chief financial officer, the legal counsel, and at least one outsider.
• C)representatives from the client's management, investors, suppliers, and customers.
• D)members of the board of directors who are not officers or employees.

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Definitions:

Risk-Free Rate

The return on investment with zero risk, typically represented by yields on government securities.

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates the stock is more volatile than the market.

Unsystematic Risk

The type of risk that is specific to a company or industry, which can be minimized through diversification.

Economic Slowdown

A period of reduced economic activity characterized by lower GDP growth, decreased consumer spending, and higher unemployment rates.