The Components of the Audit Risk Model Include Inherent Risk

question 24

True/False

The components of the audit risk model include inherent risk, control risk, and detection risk.

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Definitions:

Discount Rate

A rate used to convert future cash flows into their present value, reflecting the opportunity cost of capital or the interest rate.

Perpetuity

An annuity that pays a constant amount to an investor at regular periods forever.

Discount Rate

The rate of interest applied in the evaluation of discounted cash flows to calculate the current value of future cash movements.

Perpetuity

A financial instrument that pays a fixed amount of income indefinitely, with no end date.