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
Based on the information in Table 4-1, the debt ratio is A) 32.6%. B) 24.1%. C) 55.2%. D) 45.0%. ANSWER D
Generally accepted accounting principles (GAAP) require finance statements prepared on a cash basis because these statements are most useful for investors and managers. Indicate whether the statement is true or false ANSWER FALSE
Frank purchased a building in a run-down area of a city. When Frank was unable to obtain property insurance in the voluntary insurance market, an agent suggested that he contact a state pool created in the 1960s that makes property insurance available in riot-prone areas. The state pool the agent referred to is called a(n) […]
Which of the following are fundamental concepts that nonfinancial managers need to understand? A) How current business conditions can affect the firm’s performance. B) How to project financial statements and future investment needs. C) How capital markets work to raise long-term capital. D) All of the above. ANSWER D
Which of the following is an advantage of using private placements for debt? A) fewer and less burdensome restrictive covenants B) reduced costs from the elimination of the registration statement for the SEC, investment-banking underwriting fees and distribution costs C) lower interest costs D) the possibility of future SEC registration ANSWER B
Tina purchased a personal umbrella policy with a $1 million limit. Her insurer required her to carry liability limits of 250/500/50 under her auto insurance policy. The personal umbrella policy was written with a $1,000 self-insured retention. Tina was responsible for an auto accident in which the other driver was severely injured. The other driver’s […]
