What is the Allowable Risk of Over-reliance?

Q: Define stand-alone risk

A: Stand-alone risk:This refers to the risk linked with a single aspect of a firm or any particular…

Q: What is the best-case scenario?

A: When companies are uncertain about the details of a project such as costs, inflows, interest rate…

Q: What is the risk of Incorrect Rejection?

A: Risk of incorrect acceptance of internal control reliability and risk of incorrect acceptance of…

Q: What items could increase the risk of material misstatement?

A: Risk of material misstatement (ROMM) is a risk that the financial statements when audited will…

Q: Explain Contraction risk?

A: Contraction risk may be a hazard that the backer of fixed-revenue securities faces. This hazard…

Q: Explain risk of overreliance and risk of underreliance in brief.

A: Due to material misstatement, an auditor probably render  an unqualified opinion on the state of…

Q: What Does RiskReally Mean?

A: Risk: Risk can be defined as upcoming uncertainty about variation from anticipated earnings or…

Q: What types of information must be considered when it comes to risk and return?

A: Risk and return go hand in hand both are related to each other.There is direct correlation between…

Q: What is the difference between best efforts and underwriting?

A: The term best efforts allude to a specialist organization's consent to take the necessary steps to…

Q: What are some disadvantages of the APT?

A: APT is the abbreviation used for the arbitrage pricing theory. A theory or a model for asset pricing…

Q: What is event risk?

A: Event risk is the likelihood of a sudden event adversely affecting an organization, industry, or…

Q: What is the criticism for using SMB and HML as risk factors?

A: The Fama and French Three-Factor Model (or Fama French Model for short) is an asset pricing model…

Q: What are the Flaws of Payback Screening?

A: The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the…

Q: Explain risk-neutral valuation

A: A risk-neutral valuation is a probability measure used to help pricing derivatives and other…

Q: Why is the additional risk not taken without expected additional return?

A: The risk-return tradeoff takes note of that the potential return increments with an expansion in…

Q: Describe Inherent Risk.

A: Definition:   Audit Planning: Audit planning is the first step in the auditing process. The auditor…

Q: What happens when Control Risk is below the maximum level?

A:

Q: What is the FMS option?

A: FMS: Flexible manufacturing system

Q: averse

A: Risk is involved in everything. Risks will be there right from the task that we do till the…

Q: What is the risk of Incorrect Acceptance?

A: Risk of incorrect acceptance: The risk that the sample selected by the auditor may show that there…

Q: What are the risks from subversive threats?

A: Taking illegal access over a firm internal system network by doing activity of surpassing the…

Q: What should occur when a low level of Detection Risk is acceptable?

A: Detection risk is the risk that procedures performed to reduce audit risk will not detect a material…

Q: What is Projected Misstatement?

A:

Q: What are the differences between bottom-up and top-down approaches to security valuation? What are…

A: A top-down method to security evaluation starts with an examination of the worldwide and national…

Q: Explain about the Hedging against fair value risk.

A: Financial instrument:   It is a monetary contract between two parties which acts as an evidence of…

Q: Define the term risk?

A: Types of risk: Investment risk Market risk Inflation risk Business risk Liquidity risk

Q: Identify the weakness and the risk relating to the above.

A: Answer: The weakness is the shortcoming in any process and risk is the factor that result due to…

Q: Why is EBITDA controversial?

A: Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a metric used to assess…

Q: How can we determine whether the project under consideration is of normal risk?

A: Introduction: Risk is nothing but the variation in real returns obtained as opposed to expected…

Q: Define the term spoilage.

A: Definition:   Product costs: The costs incurred to acquire the merchandise, ship the stock, prepare…

Q: what is opportunity risk

A: Opportunity risk is a the risk off loosing a better opportunity i.e. if you have invested in a…

Q: How is VaR used to limit risk?

A: Value at Risk (VaR) a statistical tool which measures and quantifies financial risk a firm or…

Q: Define risky event

A: Risk is the variability in expected return and the actual return. When the actual return is more…

Q: Why is it important to be able to quantify risk?

A: Risk is the chance that an outcome of an investment's actual gain will differ from an expected…

Q: Define a risk event.

A: Risk Event:  When an event can cause losses to the company's stakeholders and investors due to…

Q: what is the risk-free rate (rf)?

A: Risk free rate is also called as treasury bill rate. This treasury bill rates are free from default…

Q: What are the risks associated with conversion cycle and changes need to reduce that risks?

A: Cash conversion cycle The cash conversion cycle is a method that tracks the time a company would…

Q: isk with practical example

A: Political risk Political risk is the risk an investment's returns could suffer as a result of…

Q: What is conflict of interest?

A: Conflict of interest: Conflict of interest occurs when a person derives personal benefits by…

Q: What is a goingconcern problem? What factors can contribute to such aproblem?

A: Given: To analyse about the going concern problem and its factors contribution as follows,