Millie Buenavista made the following two statements concerning inherent risk: (i) Inherent risk is the risk that an auditor expresses an inappropriate audit opinion when the financial statements are materially misstated. (ii) Inherent risk deals with the susceptibility of the financial statements to material misstatements without considering internal controls. Which of the above statements is (are) correct? An example of a qualitative material item is: a. an incorrect value reported for an asset. b. a related party transaction. c. interest expenses as being 6% of total sales. O d. none of the above.