An alternative method of projecting a firm’s future financial needs (such as bank loans ) involves creation of a pro forma cash budget. Would you consider a cash budget to be more appropriate for short-term or long-term projections? Why? How do monthly cash budgets aid in the development of an annual cash budget? Is a […]
Based on the information in Table 4-1, the average collection period is A) 29.85 days. B) 36.50 days. C) 46.34 days. D) 32.85 days. ANSWER D
Commercial banks that also provide investment banking services are called A) conglomerate banks. B) investment enhanced banks. C) multi-purpose banks. D) universal banks. ANSWER D
The personal umbrella policy covers some personal injuries. Which of the following is considered a personal injury? A) bodily injury B) property damage C) defamation of character D) liability arising from professional services ANSWER Answer: C
Asset allocation is not recommended by financial planners because mixing different types of assets, such as stocks with bonds, makes it more difficult to track performance and adjust portfolios to changing market conditions. Indicate whether the statement is true or false ANSWER FALSE
William would like to insure his home. He does not want theft or personal liability coverage; however, he would like “open perils” (all-risks) coverage on the dwelling. William should purchase a A) Homeowners 3 Policy. B) Dwelling Property 1 Form. C) Dwelling Property 2 Form. D) Dwelling Property 3 Form. ANSWER Answer: D
The corporation is a legal entity separate from its owners; thus it is possible for the corporation to continue even upon the death of one or more shareholders. Indicate whether the statement is true or false ANSWER TRUE
All of the following are commonly excluded by personal umbrella policies EXCEPT A) acts committed with the intent to cause bodily injury or property damage. B) professional liability. C) aircraft liability. D) libel, slander, and other types of personal injury. ANSWER Answer: D
Given the information in Figure 12.1, what is the break-even EBIT-EPS for Crane Manufacturing Inc.? A) EBIT = $100,000 and EPS = $0.15 B) EBIT = $250,000 and EPS = $0.35 C) EBIT = $350,000 and EPS = $0.45 D) EBIT = $400,000 and EPS = $0.65 ANSWER B Explanation: B) (EBIT-0)(1-t)/n = […]
The owners of a corporation enjoy limited liability. Indicate whether the statement is true or false ANSWER TRUE
