Which of the following statements is TRUE? A) Issuing equity automatically hurts existing shareholders. B) Equity is less expensive than debt because of the dividend tax shield found with equity. C) If a firm takes on a positive NPV project financed with new equity, existing shareholders will benefit. D) All of the above are true. […]
A company with negative net income will also have negative operating cash flow. Indicate whether the statement is true or false ANSWER FALSE
You deposit $5,000 per year at the end of each of the next 25 years into an account that pays 8% compounded annually. How much could you withdraw at the end of each of the 20 years following your last deposit if all withdrawals are the same dollar amount? (The twenty-fifth and last deposit is […]
Assume you are to receive a 10-year annuity with annual payments of $1000. The first payment will be received at the end of Year 1, and the last payment will be received at the end of Year 10. You will invest each payment in an account that pays 9 percent compounded annually. Although the annuity […]
Andrea purchased an auto insurance policy with bodily injury liability limits of 250/500 ($250,000/$500,000). She also purchased a personal umbrella policy with a $1 million limit and a $500 self-insured retention. Andrea was talking on her cell phone while driving, and her car struck and killed a pedestrian in a crosswalk. The court ordered her […]
All of the following are ISO personal umbrella liability policy exclusions EXCEPT A) liability arising out of uncompensated board service for a nonprofit organization. B) liability arising out of expected or intentional injury. C) liability arising out of business operations. D) liability arising out of operation of watercraft not covered by an underlying policy. […]
You charged $1,000 on your credit card for Christmas presents. Your credit card company charges you 26% annual interest, compounded monthly. If you make the minimum payments of $25 per month, how long will it take (to the nearest month) to pay off your balance? A) 54 months B) 40 months C) 94 months D) […]
When estimating a cash budget, which of the following items should the firm NOT include in the process? A) dividends B) taxes paid by the firm C) wages D) All of the above should be included ANSWER D
Which of the following statements is (are) true with regard to an unendorsed ISO Dwelling Form? I. The Dwelling forms provide theft coverage and personal liability insurance. II. The Dwelling 3 form provides broader property coverage than the Dwelling 1 form. A) I only B) II only C) both I and II D) neither I […]
Tina purchased a personal umbrella policy with a $1 million limit and a $1,000 self-insured retention. Her insurer required her to carry a $300,000 liability limit under her homeowners policy. Tina was held responsible for slandering a public official. The public official won a $100,000 judgment against Tina. The insurer that wrote Tina’s homeowners policy […]
