explain the relationship between hedging and measuring exposure.

Q: determine the initial recognition, initial measurement, and subsequent measurement ofbonds;

A: The face value of a bond is the fixed maturity value and the coupon is the fixed periodic amount…

Q: Distinguish between tests of controls and substantive testing.

A:

Q: What is an Audit Hook?

A: Auditing: The analytical process of evaluating and assessing the accounting information furnished by…

Q: How one can identify the respective Loss Exposures in Risk

A: The degree of uncertainty and/or potential financial loss connected with an investment choice is…

Q: What is the relationship between tests of controls and substantive tests?

A: Audit Planning:   Audit planning is the first step in the auditing process. Auditor gathers all the…

Q: What is a scenario analysis? What is it designed to show, and how does it differ froma sensitivity…

A: Scenario analysis is the technique of analyzing the portfolio to find out the expected value of…

Q: Describe the effects of risk planning on risk evaluation and treatment.

A: Risks Planning plans help a business to determine what their risks are so that one can lessen their…

Q: Define relevant risk

A: For investors, risks are classified into the following two types: Systematic risk/relevant…

Q: Describe the difference between preventive controls and detective controls. What are examples of…

A: Control activities:   Control activities are more concerned about the protection of the resources…

Q: Describe Detection Risk.

A: Risk: It is the uncertainty about the future events of the company. The adverse chances of choosing…

Q: What are the characteristics of Substantive Tests?

A: Audit Planning: Audit planning is the first step in the auditing process. Auditor gathers all the…

Q: How does the use of scenarios differ from sensitivity analysis?

A: Sensitivity analysis and scenario analysis are the assessment techniques that are used in investment…

Q: Define control risk and detection risk. What is the difference between control risk and detection…

A: Auditing:   In auditing, auditors verify the correctness and fair presentation of financial…

Q: What are the two main variables the researcher should consider collecting data for the purpose of…

A: Research is the systematic study of finding solutions to a problem. It is the search for extending…

Q: t is “inquiry” and “observation” procedures? Give the strengths and weaknesses of these tests?

A: This method is often used in conjunction with other, more reliable method. For example, an auditor…

Q: Explain the relationship of performance materiality, inherent risk, and control risk to planned…

A: Auditing:   It is an independent examination of the financial information of an organization to test…

Q: why to conduct feasivility study

A: Forecasting by financial analysts assists management in determining appropriate ways to attain the…

Q: What exactly is included inside an audit plan?

A: This question explains about an audit plan

Q: What role does the audit trail play in terms of configaration?

A: Audit trail is a series of documents, files or other evidence of accounting transaction which are…

Q: What is a sensitivity analysis, and how does it work? Can you provide an illustration of this?

A: Here is the Answer

Q: Differentiate between the techniques of vouching and verification.

A: The main objective of verification shows how assets and liabilities are valued properly. To…

Q: Explain briefly how a sensitivity analysis is done and what the analysis is designedto show.

A: The question is based on the concept of a sensitivity analysis, which is a very common analysis used…

Q: List Common Types of Analytical Procedures

A: Definition:   Analytical procedures: Analytical procedures are a method by which standard balances…

Q: What is the purpose for a Control Environment assessment?

A: Control environment: Control environment is one of the components of internal control over…

Q: Which of the following is a correct? Select one: a. Planned detection risk and inherent risk have an…

A: The audit risk refers to the risk that can not be detected by the auditor of the financial…

Q: How can spooling present an added exposure?

A:

Q: Which of the following is not a component of internalcontrol?a. Environmental assessmentb. Control…

A: Internal control: Internal control is a process which ensures continuous reliability of…

Q: Understanding the Concepts and SkillsIn one-way ANOVA, what is the residual of an observation?

A: ANOVA is known as Analysis of variance and it is usually used to identify the deviations in a sample…

Q: What are the two stages in risk assessment?

A: Risk assessment is the process which involves analysis & identification of events that can have…

Q: Define the term confirmatory value.

A:

Q: Using the flowchart provided below, identify control problems, related risks of the problem and…

A: A cost accountant is different than a cost accountant when we talk about performing duties. The…

Q: = preventive controls™

A: 1st option is wrong because it can not be ensured that preventive controls are 100% effective. 2nd…

Q: Explain relationship between the client’s performance measurement system and client’s inherent risk.

A: Auditing is a process of inspecting the financial accounts of a company in order to determine the…

Q: What is sensitivity analysis and its functions?

A: The answer for the theory question on sensitivity analysis and its functions is discussed hereunder…

Q: What are two potential tests that can be conductedto verify the CAPM? What are the results of…

A: The Capital Asset Pricing Model (CAPM) illustrates the connection between systematic risk and…

Q: Distinguish between exposure and risk.

A:

Q: Define risk of material misstatement.

A: Material misstatement represents the statement presented in the financial statement which is…

Q: What is a sensitivity analysis?

A: Sensitivity analysis:Sensitivity analysis ascertains the manner in which the different values of an…

Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.