Some directors and officers (D&O) liability policies include an insuring agreement tcovers the legal liability of a corporation arising out of the wrongful acts of directors and officers. This coverage for the corporation is called A) blanket coverage. B) corporate reimbursement coverage. C) personal liability of directors and officers coverage. D) entity coverage. […]
Which of the following forms of business organization limits the liability of owners? A) sole proprietorship B) general partnership C) two person partnership D) corporation ANSWER D
One general liability loss exposure develops as a result of a written or oral agreement to assume the legal liability of another party. A lease that specifies that the building owner is held harmless for liability arising out of use of the building is an example. This liability loss exposure is A) premises and operations […]
Which of the following organization forms accounts for the most revenue? A) “S” corporation B) Limited partnership C) “C” corporation D) Limited liability company ANSWER C
Explain why the author uses the following formula to explain the amount of money a firm needs to repay an outstanding principal balance. Support your answer with n example that shows how much in EBT a firm in a 30% tax bracket would require to repay $1,000 in principal. Before-tax cost of debt repayment = […]
The auto dealers coverage form includes coverage for violating odometer (mileage) disclosure laws and selling a vehicle where there was a title defect. Which coverage under the auto dealers coverage form would respond to such claims? A) garagekeepers liability coverage B) liability coverage for “covered autos” C) general liability insurance coverage D) acts, errors or […]
What was the average annual rate of return on 3-month U.S. Treasury bills during the period 1990 to 2014? A) 3.04% B) 5.68% C) 4.23% D) 2.15% ANSWER A
Based on the information in Table 4-3, assuming that the firm has no preferred stock, and paid $300,000 in common dividends, the firm’s return on equity was A) 61.89%. B) 43.34%. C) 79.43%. D) 33.53%. ANSWER D
Which of the following is NOT a disadvantage of a sole proprietorship as a form of business organization compared to the corporate form of business organization? A) Access to the capital markets B) Unlimited liability of the owners C) Subject to the double taxation D) Limited liability of the shareholders ANSWER D
Why is the price/earnings ratio a common and popular technique for evaluating stocks? Why do fast growing firms have higher P/E ratios? What is a long-run average P/E ratio for larger publicly traded firms in the United States? What are some limitations to using this technique to evaluate stock prices? ANSWER P/E ratios […]
