For an all-equity firm, the cost of equity is equal to the overall cost of capital. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A firm has after-tax cash flow from operations equal to $100,000. Operating working capital increased by $20,000, and the firm purchased $30,000 of fixed assets. The firm’s free cash flow was A) $90,000. B) $110,000. C) $50,000. D) $150,000. ANSWER C
Date: September 19th, 2020
Which of the following statements is MOST correct concerning diversification and risk? A) Proper diversification generally results in the elimination of risk. B) Risk-averse investors often choose companies from different industries for their portfolios because the correlation of returns is less than if all the companies came from the same industry. C) Risk-averse investors often […]
Date: September 19th, 2020
A point to keep in mind is that financial managers should consider taking less financial risk when operating risk is high, but may consider taking more financial risk when operating risk is low. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The following two items are from Marcia White’s “Dining Out” expense category: 1. January monthly variance = $25 (favorable); 2. February cumulative variance = -$10 (unfavorable). If Marcia budgeted $85 a month for this activity, we know that she A) spent $60 in January and $95 in February. B) spent $60 in January and $120 […]
Date: September 19th, 2020
Which of the following is covered under the liability coverage of a businessowners policy? A) damage to the insured’s property B) bodily injury liability C) automobile liability D) professional liability ANSWER Answer: B
Date: September 19th, 2020
Which of the following statements is (are) true concerning the self-insured retention (SIR) under a commercial umbrella liability policy? I. The SIR applies to claims covered by the umbrella policy but not by any underlying insurance. II. The SIR only applies to those claims for which the underlying policy has paid first, and the umbrella […]
Date: September 19th, 2020
Which of the following organizational forms accounts for the greatest number of firms? A) “S” Corporation B) Limited partnership C) Sole proprietorship D) “C” corporation ANSWER C
Date: September 19th, 2020
The nominal interest rate is 7% and the expected inflation rate is 2%. Based on the Fisher effect, the real rate of interest is A) 6.86%. B) 5.0%. C) 4.9%. D) 5.1%. ANSWER C
Date: September 19th, 2020
The auto dealers coverage form pays for damages that the insured is legally obligated to pay because of damage to a customer’s auto left in the insured’s car while it is being serviced or repaired. This coverage is called A) garagekeepers coverage. B) general liability coverage. C) other-than-collision loss coverage. D) acts, errors or omissions […]
Date: September 19th, 2020
