Has looking beyond U.S. borders been a profitable experience for U.S. corporations? What will be an ideal response? ANSWER Many U.S. companies, including General Electric, IBM, Walt Disney, and American Express, have restructured their operations to expand internationally. The bottom line is that what you think of as a U.S. firm may be […]
The major disadvantage of a general partnership is: A) each partner is fully responsible for the liabilities incurred by the partnership. B) it is difficult to raise equity capital. C) the costs of forming the partnership are high. D) profits are taxed double. ANSWER A
Insurer A began to provide crime insurance coverage for JKL Company three months ago. Insurer B provided coverage up until the time Insurer A’s coverage became effective. Forty-five days after the effective date of Insurer A’s coverage, a loss was discovered that occurred while Insurer B was providing coverage. The loss would have been covered […]
You bought a racehorse that has had a winning streak for six years, bringing in $250,000 at the end of each year before dying of a heart attack. If you paid $1,155,720 for the horse 4 years ago, what was your annual return over this 4-year period? A) 8% B) 33% C) 12% D) 18% […]
Beginning with an investment in one company’s securities, as we add securities of other companies to our portfolio, which type of risk declines? A) systematic risk B) non-diversifiable risk C) market risk D) unsystematic risk ANSWER D
Which of the following statements is true with regard to the kidnap/ransom extortion coverage available through ISO’s Commercial Crime Coverage program? A) Ransom is covered only if the hostage is returned alive. B) Money surrendered as a result of an extortion threat is covered. C) The kidnap/ransom coverage is limited to the direct loss associated […]
Which of the following statements is (are) true with respect to the kidnap/ransom and extortion coverage available through ISO’s Commercial Crime Coverage program? I. It covers the loss of money that is paid for ransom if someone is kidnaps. II. It covers some indirect costs association with a kidnapping, such as hiring a hostage negotiator. […]
Metro City would like a pedestrian bridge constructed across Big Creek. The city will accept bids on the project until a specified date. Bidders must submit a bid bond that guarantees if the bid is accepted, the bidder will sign the construction contract and furnish a bond that guarantees the construction work will be completed […]
White’s World Wide Delivery Inc. has an unlevered beta = 1.25, a debt-equity ratio of 0.30, a tax rate of 0.20, and a levered beta = 1.55. If the firm increased the debt-equity ratio to 50%, what would be the impact on the levered beta? A) Increase to a value of 1.75 B) No change […]
An automobile is usually an example of a lifestyle asset. Indicate whether the statement is true or false ANSWER TRUE
