While the Homeowners Flood Insurance Affordability Act of 2014 rolled-back some premium increases in the Biggert-Waters Act, it included a provision to help fund the large deficit in the National Flood Insurance Program. The provision to help fund the deficit is A) a surcharge on every new home that is constructed in a flood plain. […]
Total risk equals systematic risk plus unsystematic risk. Indicate whether the statement is true or false ANSWER TRUE
Valerie’s home does not qualify for coverage under a standard homeowners policy. Valerie would like to have “open-perils” (all-risks) coverage on her dwelling and named-perils coverage on her personal property. Which of the following policies should Valerie purchase? A) Dwelling Property 1—Basic Form B) Dwelling Property 2— Broad Form C) Dwelling Property 3—Special Form D) […]
An understanding of the role of capital markets is one of the fundamental concepts that a nonfinancial manager should understand in order to: A) better assess the current environment in which the firm operates. B) better assess future financing requirements. C) better understand the role of the capital markets in raising long-term funds. D) better […]
Which of the following statements about mobile home insurance under the ISO program is true? A) The mobile home is insured on a replacement cost basis, but actual cash value coverage can be added by endorsement if it is more appropriate. B) There is no coverage available for “other structures.” C) Built-in, permanently attached furniture […]
Tom and Nancy Boyle were surprised to learn that some of their valuable personal property—a gun collection, jewelry, a mink coat, and sterling silverware—was subject to internal limits under their homeowners policy. What separate insurance policy can the Boyles purchase to obtain the desired coverage on this personal property? A) personal umbrella policy B) dwelling […]
Which of the following choices would NOT be considered a cash outflow? A) operational expenses B) anticipated sales C) selling, general, and administrative expenses D) capital expenditures ANSWER B
In order to be conservative, accrual accounting requires that expenses be recorded when incurred, but revenues are recorded only after the cash has been received. Indicate whether the statement is true or false ANSWER FALSE
All of the following are characteristics of inland marine floater policies EXCEPT A) Coverage can be specifically tailored to the specific type of personal property insured. B) Coverage applies only when the property is at a specified location, such as the insured’s home. C) The amount of insurance can be selected by the purchaser. D) […]
Based on the information in Table 4-1, assuming that no preferred dividends were paid, the return on common equity is A) 55.15%. B) 17.56%. C) 38.83%. D) 44.86%. ANSWER A
