Which of the following assumptions concerning the probability distribution of the random error term is stated incorrectly?
a. The distribution is normal.
b. The mean of the distribution is 0.
c. The variance of the distribution increases as x increases.
d. The errors are independent from one value of y to the next.
C
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In determining the sample size for a test of controls, an auditor should consider the expected population deviation rate, desired confidence level, and the:
A. tolerable deviation rate. B. population size. C. risk of incorrect acceptance. D. nature and cause of deviations.
If the discount (or interest) rate is positive, the future value of an expected series of payments will always exceed the present value of the same series.
Answer the following statement true (T) or false (F)
Which of the following is NOT a characteristic of commercial paper?
A) It is issued by large firms. B) It has a one- to two-year maturity. C) Its rates are usually below prime rates on business loans. D) All of these options are commercial paper characteristics.
Blauvelt Electronics Corporation has developed a new instrument-model GZ-29-that has been designed to outperform a competitor's best-selling instrument. Model GZ-29 has a useful life of 30,000 hours of service and its operating cost is $3.20 per hour. In contrast, the competitor's product has a useful life of 10,000 hours of service and has operating costs that average $5.60 per hour. The competitor's instrument sells for $149,000. Blauvelt has not yet established a selling price for model GZ-29.From a value-based pricing standpoint what is the reference value that Blauvelt should consider when pricing model GZ-29?
A. $245,000 B. $447,000 C. $149,000 D. $205,000