Fifth National Bank decided to loan $200,000 to Fred Franklin. As collateral for the loan, Fred posted stock certificates. When Fred defaulted on the loan, Fifth National tried to sell the stock. They discovered the stock certificates were stolen from someone else. Which insuring agreement in a financial institution bond is designed to cover such […]
Optimal capital structure “first” criteria suggests that THE IMPACT ON EPS should be ________ and that the best way to obtain that is with ________ levels of debt and ________ levels of equity. A) high; low; high B) low; high; low C) high; high; low D) low; low; high ANSWER D
Gaston Grooming Inc., has a sustainable growth rate of 17.28%. If the retention ratio is .60, the leverage ratio is 1.2 and the asset turnover ratio is 1.6, what was the firm’s profit margin? A) 15.0% B) 13.6% C) 12.1% D) 11.4% ANSWER A Explanation: A) PM = SGG/(ATO * LR * b) […]
Which of the following statements is (are) true with respect to financial institution bonds? I. Fidelity coverage covers losses resulting from the dishonest acts of employees. II. Financial institutions usually insure their crime exposures through financial institutions bonds. A) I only B) II only C) both I and II D) neither I nor II c […]
Bernice is an underwriter. She is reviewing a commercial crime coverage application. The coverage will be written using the discovery form. Bernice is concerned that a large undiscovered loss may exist prior to the policy’s inception date. Which provision should Bernice add to the policy to protect the insurer against liability for such previous losses? […]
Depositors often cite ________ as the most important consideration in selecting a particular bank. A) safety B) low charges C) size D) geographical convenience ANSWER D
A burglar took some blank checks during a break-in at XYZ Company. He was careful to make sure that the theft would be difficult to discover. Three months later, he wrote himself a check for $20,000 and signed the company treasurer’s name on the check. After the check was cashed, the loss was discovered. Which […]
Eagle Enterprises Inc., has an asset turnover of 1.1, a financial leverage ratio of 1.67, a profit margin of 12% and a dividend payout ratio of 25%. What is the firm’s sustainable growth rate? A) 29.39% B) 14.07% C) 5.51% D) 16.53% ANSWER D Explanation: D) Sustainable Growth = ROE * b = […]
In the ISO Commercial Crime Coverage form, robbery is defined as the A) unlawful taking of property to the deprivation of the insured. B) unlawful taking of property from the care and custody of a person by someone who has caused or threatens to cause bodily harm or who has committed an unlawful act witnessed […]
Asset values on the balance sheet should reflect their acquisition costs. Indicate whether the statement is true or false ANSWER FALSE
