A Contingency Was Evaluated at Year-End

question 114

True/False

A contingency was evaluated at year-end.Management felt it was probable that this would become an actual liability and the amount could be reasonably estimated.If this is reported on the balance sheet,it could be considered a violation of generally accepted accounting principles.

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Definitions:

Market Risk Premium

The additional return investors expect for holding a risky market portfolio instead of risk-free assets.

Risk-Free Rate

The hypothetical return on a risk-free investment, typically illustrated by the interest earned on government securities.

Beta

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

Expected Return

The average of all possible returns from an investment, weighted by their probabilities.