An Auditor Assesses the Level of Control Risk To

question 50

Multiple Choice

An auditor assesses the level of control risk to:

• A)determine whether the entity is a going concern.
• B)determine the extent of substantive tests to be performed.
• C)ascertain whether irregularities are probable.
• D)ascertain whether any employees have incompatible duties.

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Definitions:

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date, encompassing both interest payments and the gain or loss if the bond was purchased at a discount or premium.

Zero Coupon Bond

A bond issued at a discount and repaid at face value at maturity without periodic interest payments.

Percentage Increase

A measure of the degree to which a quantity grows over a period of time, calculated as the change in value divided by the original value and expressed as a percentage.

Interest Rate Price Risk

The potential for an investment’s value to change due to a fluctuation in the absolute level of interest rates, illustrating the inverse relationship between price and interest rates.