Which of the following statements about the extra expense coverage form is (are) true? I. It provides coverage for the increased cost that must be paid to continue operations during a period of restoration. II. It provides coverage for lost business income if a key customer or key supplier experiences a loss. A) I only […]
Based on the information in Table 4-1, the total asset turnover ratio is A) 1.41. B) 1.11. C) 2.33. D) 4.45. ANSWER B
Juanita has the following three ratios: 1. debt service coverage = 2.5, 2. debt ratio = 0.5, and 3 . liquidity ratio = 0.8. We can say that Juanita has A) poor solvency and poor liquidity. B) strong solvency and strong liquidity. C) strong liquidity but poor solvency. D) strong solvency but poor liquidity. […]
You can buy a $50 savings bond today for $25 and redeem the bond in 10 years for its full face value of $50. You could also put your money in a money-market account that pays 7% interest per year. Which option is better, assuming they are of equal risk? A) The money-market account is […]
Unique security risk can be eliminated from an investor’s portfolio through diversification. Indicate whether the statement is true or false ANSWER TRUE
Advantages of private placements do NOT include which of the following? A) lower flotation costs B) funds which are available more quickly than through a public offering C) more financing flexibility D) investor protection through extensive regulation ANSWER D
S-type corporations have all of the following advantages EXCEPT A) distributions are taxed twice, similar to corporate dividend payments. B) they are taxed as partnerships. C) all owners must be people, no corporations. D) the owners have limited liability. ANSWER A
Your grandparents deposit $2,000 each year on your birthday, starting the day you are born, in an account that pays 7% interest compounded annually. How much will you have in the account on your 21st birthday, just after your grandparents make their deposit? A) $79,640 B) $101,802 C) $98,016 D) $86,058 ANSWER C
Which of the following statements about the building and personal property coverage form is (are) true? I. A limited amount of coverage is provided for pollutant cleanup and removal at the described premises if the release or discharge of the pollutant results from a covered cause of loss. II. Fire department service charges are specifically […]
Some fundamental concepts that nonfinancial managers need to understand include: A) the ability to assess day-to-day cash management. B) the ability to assess future financing requirements. C) the ability to understand the role of capital markets in raising long-term funds. D) All of the above. ANSWER D
