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
Date: September 19th, 2020
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: […]
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
Investment banking firms offer to facilitate the sale of securities to the public in a variety of ways. Which of the following methods guarantees the corporation with a pre-determined price for the securities? A) an underwriting B) a commission basis C) a competitive bid D) a best efforts basis ANSWER A
Date: September 19th, 2020
Which of the following goals of the firm is equivalent to the maximization of shareholder wealth? A) Profit maximization B) Risk minimization C) Maximization of the total market value of the firm’s common stock D) None of the above ANSWER C
Date: September 19th, 2020
A stock with a beta of 1 has systematic or market risk equal to the “typical” stock in the marketplace. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Diversifying among different kinds of assets is called asset allocation. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Mark purchased a boat owners package policy. While using his boat, he negligently hit a pier. A person standing on the pier fell and was severely injured. Which of the boat owners package policy coverages will respond to a lawsuit filed as a result of this negligent act? A) physical damage coverage B) liability coverage […]
Date: September 19th, 2020
Pinnacle Financial Management projects that earnings per share for Valley Imports Inc. will increase from the current $1.75 per share to $2.00 next year. If Pinnacle recommends a P/E ratio of 12.5 for Valley Imports, what is the recommended forward looking price for the firm? A) $21.88 per share B) $25.00 per share C) $23.44 […]
Date: September 19th, 2020
Jan showed the following financial items in 2007 and 2008: 2007 2008 Salary 22,000 20,000 Payroll taxes 4,000 3,500 Other inflexible expenses 11,000 11,000 Flexible expenses 6,000 5,300 In relation to 2007’s savings, Jan’s savings in 2008 A) decreased by $800. B) decreased by $200. C) increased by $200. D) increased by $800. […]
Date: September 19th, 2020
