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
You have the choice of two equally risk annuities, each paying $5,000 per year for 8 years. One is an annuity due and the other is an ordinary annuity. If you are going to be receiving the annuity payments, which annuity would you choose to maximize your wealth? A) the annuity due B) the ordinary […]
A corporate financial manager who is trying to create value for its shareholders: A) is not concerned with ethics but rather with writing iron-clad contracts. B) can safely ignore ethics as long as no laws are broken. C) must behave ethically to stay out of jail. D) is concerned with ethics because unethical behavior destroys […]
Rob’s income was $20,000 in 2005 and $22,000 in 2006. If inflation was 6% in 2006, then we can say that Rob’s 2006 income A) simply matched the inflation rate. B) fell behind the inflation rate. C) exceeded the inflation rate by 4%. D) lagged the inflation rate by 2%. ANSWER C
Which of the following statements concerning FAIR plans is (are) true? I. All property is eligible for coverage regardless of physical condition. II. Losses and expenses are shared by insurers who participate in a plan. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: […]
What are a firm’s two principal sources of financing? Of what do these sources consist? What will be an ideal response? ANSWER The total assets represent the resources owned by the firm, and total liabilities and total shareholders’ equity indicate how those resources were financed. Debt is money that has been borrowed and […]
Steve and Mary are art collectors. They own lithographs, etchings, and vintage photographs valued at over $250,000. Steve and Mary display their art collection at their home. They can insure this valuable personal property through a A) title insurance policy. B) dwelling property form. C) personal articles floater form. D) personal umbrella policy. […]
A stock with a beta of 1.4 has 40% more variability in returns than the average stock. Indicate whether the statement is true or false ANSWER TRUE