Which of the Following Is Allowable for a CPA

question 53

Multiple Choice

Which of the following is allowable for a CPA?

• A)A used car loan from a banking client where the client has a lien on the car.
• B)An uncollateralized signature loan from a client.
• C)Owning more than five percent of the outstanding shares of client stock in a retirement account.
• D)The audit engagement partner (or partner equivalent)serves on the client's audit committee.

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Definitions:

CAPM

Capital Asset Pricing Model, a formula used to determine the expected return on an investment based on its risk relative to the overall market.

True Market Portfolio

A theoretical bundle of all possible investments that are weighted by market value.

Stock's Alpha

Stock's Alpha measures a stock's performance relative to a benchmark index, indicating its value added or lost against the market average.

Abnormal Return

The difference between the actual return of a security and the expected return, typically due to unexpected events.