Consistency Requires

question 88

Multiple Choice

Consistency requires

• A)that the company use the same accounting procedures from period to period.
• B)that the company use the same accounting procedures as other companies in the same industry.
• C)that the company explain,in a note to the financial statements,the significant accounting policies used.
• D)All of these choices.

---

Definitions:

Risk Premium

The additional return an investor expects to receive for taking on additional risk compared to a risk-free asset.

Multifactor APT

A model that describes the return of a security or portfolio in relation to various risk factors and the expected return on the assets, extending the concepts of the Capital Asset Pricing Model (CAPM).

Expected Return

The average of all possible returns for an investment, weighted by the likelihood of each outcome, representing the mean of the probability distribution of returns.

APT

The Arbitrage Pricing Theory, an asset pricing model that predicts a security's returns using the linear relationship of its expected return with macroeconomic factors.