A CPA's Client Base Includes Both Publicly Traded Corporations and Smaller

question 8

Multiple Choice

A CPA's client base includes both publicly traded corporations and smaller privately-owned clients.Some of these clients require audits,and others only require bookkeeping and tax compliance services.If the CPA wishes to sell her professional practice to another CPA firm,she may disclose to the prospective buyer information concerning:

• A) only the publicly traded clients
• B) only the clients for whom she issues an audit opinion
• C) all information requested, as long as she takes reasonable precautions to ensure that the prospective buyer does not disclose sensitive client information shown to it
• D) none of these clients, due to the duty of confidentiality

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Definitions:

Required Return

The minimum expected return an investor demands for investing in a particular asset, considering the risk involved.

Correlation Coefficients

Statistical measures that indicate the extent to which two variables fluctuate together.

Risk-Free Rate

The rate of return on an investment with no risk of financial loss, often represented by the yield on government securities.

Market Risk Premium

The additional return an investor expects to receive from a market portfolio over a risk-free rate due to the inherent risks.