The process of determining the effects of one key variable on the overall outcome of a pro forma income statement, for example, is known as: A) ratio analysis. B) scenario analysis. C) sensitivity analysis. D) form analysis. ANSWER C
If management perceives the current market equity value of their shares to be OVER valued, then management should: A) issue new shares later after stock prices have come down so as not to further increase the price dilution found when issuing shares. B) issue new shares now to take advantage of the market mispricing, but […]
All of the following statements about the businessowners policy are true EXCEPT A) Coverage for business personal property includes coverage for leased personal property which the named insured has a contractual responsibility to insure. B) The amount of insurance on the buildings increases by a stated percentage each year. C) Additional coverages include pollutant cleanup […]
All of the following statements about inland marine forms are true EXCEPT A) A mail coverage form covers securities in transit by first-class mail, registered or certified mail, or express mail. B) A commercial articles coverage form is used to insure photographic equipment and musical instruments. C) A jewelers block coverage form is used by […]
A commitment fee is A) paid by investors to guarantee that a company will borrow from them. B) an amount paid by an investment banker to ensure the sale of securities. C) paid by bondholders to secure the right to convert bonds into common stock. D) an amount paid on the unused portion of a […]
A company borrows $2,000,000 and uses the money to purchase high technology machinery for its operations. These are examples of A) cash flow from financing and cash flow from operations. B) cash flow from financing and cash flow from investing. C) cash flow from investing and cash flow from operations. D) cash flow from investing […]
Which of the following statements about ocean marine insurance coverages is (are) true? I. Hull insurance limits coverage to the breakdown of a ship’s machinery and equipment. II. Protection and indemnity insurance provides liability insurance to the ship owner for bodily injury and property damage to third parties. A) I only B) II only C) […]
The generation of cash budgets and and pro forma financial statements are equivalent ways of forecasting financial needs. Indicate whether the statement is true or false ANSWER TRUE
Which of the following statements describes a Difference in Conditions (DIC) Policy? A) It is a type of commercial umbrella liability policy. B) It is an open perils policy that covers perils not insured by basic property insurance contracts. C) It is designed to cover indirect losses for which the insured has direct damage coverage. […]
Portfolio performance is determined mainly by stock selection and market timing, with less emphasis on asset allocation. Indicate whether the statement is true or false ANSWER FALSE