Which of the following would not result in the audit team’s selecting a larger sample of controlsfor examination?a. A reduction in the risk of overreliance from 10 percent to 5 percent.b. An increase in the tolerable rate of deviation from 3 percent to 6 percent.c. An increase in the expected population deviation rate from 2 percent to 4 percent.d. All of the above would result in a larger sample of controls
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Which of the following would not result in the audit team’s selecting a larger sample of controls
for examination?
a. A reduction in the risk of overreliance from 10 percent to 5 percent.
b. An increase in the tolerable rate of deviation from 3 percent to 6 percent.
c. An increase in the expected population deviation rate from 2 percent to 4 percent.
d. All of the above would result in a larger sample of controls
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