The co-insurance provision on homeowners’ policies A) is meant to eliminate homeowners claims for small losses. B) means that the homeowner will receive less than 100% reimbursement on all losses. C) implies that more than one insurance company may be responsible for the losses. D) provides an incentive for homeowners to insure their homes for […]
A risk-adjusted rate of return for a mutual fund uses the fund’s beta weight. Indicate whether the statement is true or false ANSWER TRUE
Which of the following policies can be sold only by a registered securities dealer? A) Universal life B) Variable life C) Whole life D) Term life ANSWER B
Which of the following statements about Economic Value Added (EVA) is NOT true? A) EVA is a measure of value creation. B) EVA is a process for attempting to create value. C) If a firm generates positive EVA then it increases shareholder value. D) All of the above are true. ANSWER D
For those workers not nearing retirement, funds in an Employee Stock Ownership Plan are generally held in A) stock issued by the company of employment. B) stock issued by companies in the industry of employment. C) stock held by selected mutual funds. D) both mutual stock funds and mutual bond funds. ANSWER A
A disadvantage of mutual funds is that they cannot be used in IRAs. Indicate whether the statement is true or false ANSWER FALSE
If a bond sells for less than its par value then the yield to maturity is greater than the coupon rate. Indicate whether the statement is true or false ANSWER TRUE
An unattractive feature of U.S. corporate bonds is that there is no secondary market and the investor is forced to hold the bond until maturity. Indicate whether the statement is true or false ANSWER FALSE
One performance measure of a mutual fund is to determine the growth of a given amount of investment, assuming all fund distributions are used to buy more shares of the fund. Indicate whether the statement is true or false ANSWER TRUE
There are tax penalties for A) early withdrawals from an IRA, but not for late withdrawals. B) late withdrawals from an IRA, but not for early withdrawals. C) both early and late withdrawals from an IRA. D) early withdrawals on company-sponsored pension plans, but not on IRAs. ANSWER C
