Which of the following statements about Generally Accepted Accounting Principles (GAAP) is NOT true? A) GAAP is a set of rule-based accounting standards established by the Financial Accounting Standards Board (FASB). B) GAAP is complex, providing more than 150 “pronouncements” as to how to account for different types of transactions. C) GAAP sets out the […]
Tracy is a trust officer at a bank. One of her responsibilities is to manage funds that have been set aside for the benefit of minor children. What type of bond guarantees that Tracy will faithfully execute her required duties in this capacity? A) fiduciary bond B) public official bond C) court bond D) performance […]
Which of the following statements about surety bonds is (are) true? I. The surety has a legal right to recover a loss payment it made on behalf of a defaulting principal. II. The obligee is the party who benefits from the bond if the principal fails to perform. A) I only B) II only C) […]
If you hold a portfolio made up of the following stocks: Investment Value Beta Stock X $4,000 1.5 Stock Y $5,000 1.0 Stock Z $1,000 .5 What is the beta of the portfolio? A) 1.24 B) 1.33 C) 1.00 D) 1.15 ANSWER D
In the context of a surety agreement, the party who agrees to answer for the debt, default, or obligation of another party is called the A) principal. B) obligee. C) surety. D) fidelity. ANSWER Answer: C
National Bank believed it had been properly authorized to transfer $250,000 to the off-shore account of one of its corporate customers. The authorization was fraudulent, however, and the transferred funds were stolen. Under which commercial crime coverage insuring agreement would such a loss be covered? A) Money Orders and Counterfeit Currency B) Forgery or Alteration […]
Optimal capital structure “first” criteria suggests that RISK should be ________ and that the best way to obtain that is with ________ levels of debt and ________ levels of equity. A) high; high; low B) low; high; low C) low; low; high D) high; low; high ANSWER C
Beta is a statistical measure of A) total risk. B) the standard deviation. C) unsystematic risk. D) the relationship between an investment’s returns and the market return. ANSWER D
In the context of a surety agreement, the party who agrees to perform certain acts or fulfill certain obligations is called the A) fidelity. B) obligee. C) surety. D) principal. ANSWER Answer: D
An armed robber pulled a gun on a teller at the Fourth National Bank. He made off with over $10,000 in cash. Which insuring agreement in a financial institution bond is designed to cover such losses? A) Insuring Agreement A—Fidelity B) Insuring Agreement B—On Premises C) Insuring Agreement C—In Transit D) Insuring Agreement D—Forgery or […]
