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
Optimal capital structure “first” criteria suggests that SHAREHOLDER CONTROL 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; low, high C) low; high; low D) high; low; high ANSWER A
International Financial Reporting Standards (IFRS) is a set of principle-based accounting standards that were established by the International Accounting Standards Board (IASB). Indicate whether the statement is true or false ANSWER TRUE
The head teller of a bank embezzled $50,000 from the bank. 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 Alteration ANSWER Answer: A
Over the period 1926 to 2014, the standard deviation of returns has been the greatest for which of the following? A) common stocks B) Treasury bills C) corporate bonds D) government bonds ANSWER A
