Inherent Risk and Control Risk Differ from Detection Risk in That

question 51

Multiple Choice

Inherent risk and control risk differ from detection risk in that they ________.

• A)arise from the misapplication of auditing procedures
• B)may be assessed in either quantitative or non-quantitative terms
• C)exist independently of the financial statement audit
• D)can be changed at the auditor's discretion

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Definitions:

Treasury Bills

Short-term debt securities issued by the government with a maturity of less than one year, used to finance government spending.

Put Option

A financial contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a predetermined price within a specific time frame.

Market Value

The present cost at which a product or service is available for purchase or sale in the market.

Exercise Price

The specified price at which an option's holder can buy (call option) or sell (put option) the underlying security or commodity.