Which of the following perils is covered under the Dwelling Property 2 (broad form) policy? A) weight of ice, snow, or sleet B) flood C) theft D) earthquake ANSWER Answer: A
Which of the following statements concerning the scheduled personal property endorsement with agreed value loss settlement is (are) true? I. The endorsement provides open-perils (“all-risks”) coverage on the scheduled property. II. Losses under the endorsement are settled on an actual cash value basis. A) I only B) II only C) both I and II D) […]
Which of the following statements is generally NOT true? A) A firm should attempt to match the nature of a project with the duration of the financing it needs. B) Short-term debt usually carries lower interest rates than long-term debt with comparable default risk. C) Issuing variable rate debt increases financial uncertainty relative to issuing […]
Which of the following relationships is true regarding the costs of issuing the following securities? A) common stock > preferred stock > bonds B) bonds > common stock > preferred stock C) common stock > bonds > preferred stock D) preferred stock > common stock > bonds ANSWER A
Which of the following statements about Dwelling Property 3 (special form) is (are) true? I. Personal property is covered only for those perils specifically named in the policy. II. The dwelling and other structures are covered on an “open perils” (all risks) basis. A) I only B) II only C) both I and II D) […]
The current ratio of a firm would be decreased by which of the following? A) Inventories are sold for cash. B) Land held for investment is sold for cash. C) Equipment is purchased, financed by a long-term debt issue. D) Inventories are sold on a long-term credit basis. ANSWER D
Which of the following statements regarding Section II coverage under the Homeowners 3 policy is true? A) Medical payments to others are covered regardless of whether the insured is legally liable. B) Legal defense costs incurred by the insurer to defend the insured reduce the per-occurrence limit of liability available. C) The insurer is not […]
Polly purchased a Homeowners 3 policy. She has a swing set in the backyard of her home. While her son and the neighbor’s child were using the swing set, it collapsed. Both of the children required medical care. Which of the following statements is true? A) The medical expenses Polly’s son are covered under the […]
Universal Financial, Inc. has total current assets of $1,200,000; long-term debt of $600,000; total current liabilities of $500,000; and long-term assets of $800,000. How much is the firm’s net working capital? A) $900,000 B) $600,000 C) $700,000 D) $1,000,000 ANSWER C
Which of the following is NOT a common characteristic of issuing long-term debt? A) Issuing long-term debt decreases uncertainty compared to a short-term fixed-rate issue. B) Issuing long-term debt provides more frequent financing opportunities. C) Long-term interest rates are typically HIGHER than short-term rates. D) Long-term debt may be preferred because short-term debt financing could […]