EQUITY RISK PREMIUM Definition

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EQUITY RISK PREMIUM is a rate of return in addition to a risk-free rate to compensate for investing in equity instruments because they have a higher degree of probable risk than risk-free instruments (a component of the cost of equity capital or equity discount rate).

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CUT SCORE is a point on a score scale in which scores at or above the point are in a different category or classification than scores below the point (e.g. pass versus fail).

SUBSEQUENT EVENTS affect the client and occur between the balance sheet date and issuance of the financial statements. Some such events provide additional evidence about conditions that existed at the balance sheet date, such as the bankruptcy of a customer with a history of financial difficulty. The financial statements are adjusted to reflect this evidence. Conditions that did not exist at the balance sheet date, such as fire that destroyed the client's plant after the balance sheet date, may be so significant as to require disclosure.

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