All of the following statements about liability coverage under the businessowners policy are true EXCEPT A) Liability arising out of personal and advertising injury is covered as part of the insuring agreement. B) Medical payments coverage is provided. C) Employees acting within the scope of their employment are excluded from coverage. D) Coverage is included […]
Sensitivity analysis highlights the impact of a change in one key variable on another key variable. Indicate whether the statement is true or false ANSWER TRUE
Which of the following statements about physicians, surgeons, and dentists liability insurance is true? A) Liability coverage is restricted to accidental acts. B) The policy eliminates the need for medical practitioners to purchase general liability insurance. C) The insurer must obtain the consent of medical practitioners before the insurer can settle claims. D) The policy […]
Which of the following statements about errors and omissions insurance is (are) true? I. It is purchased by professionals to protect against claims arising for negligent acts, errors, and omissions. II. It is designed to meet the needs of stock brokers, attorneys, engineers, architects and other professionals who give advice to clients. A) I only […]
What is the present value of an annuity of $120 received at the end of each year for 11 years? Assume a discount rate of 7%. The first payment will be received one year from today (round to nearest $1). A) $570 B) $900 C) $400 D) $250 ANSWER B
Which of the following losses is generally covered under a commercial umbrella policy? A) liability arising out of workers compensation laws B) liability arising out of pollution C) liability arising out of use of a business auto D) the cost of recalling defective products ANSWER Answer: C
A basis point is equal to A) one-tenth of one percent. B) one-hundredth of one percent. C) one percent. D) one-half of one percent. ANSWER B
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
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
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 […]
