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 […]
The category of securities with the highest historical risk premium is A) small company stocks. B) small company corporate bonds. C) large company stocks. D) government bonds. ANSWER A
The investment banker does NOT underwrite the securities to be issued in which of the following? A) firm commitment B) initial public offering C) best efforts D) primary market transaction ANSWER C
One of the “Tips for Buying a Homeowners Policy” is to consider purchasing a personal umbrella policy. What coverage is provided by a personal umbrella policy? A) blanket property coverage for any damage caused by water B) excess liability coverage and coverage for some liability claims excluded by underlying policies C) all-risk, replacement cost, property […]
Which of the following statements is true regarding the Homeowners 3 policy and identity theft? A) Identity theft is covered under Coverage D—Loss of Use. B) Identity theft is covered under Coverage C—Personal Property. C) Identity theft is covered under Coverage E—Personal Liability. D) Identity theft is covered by adding an endorsement. ANSWER […]
Which of the following choices would NOT be found on a pro forma balance sheet? A) forecasted sales B) total liabilities C) fixed assets D) current assets ANSWER A
Which of the following best describes the ultimate task of the financial managers? A) Profit maximization B) Risk minimization C) Maximization of shareholders’ wealth D) None of the above ANSWER C
Which of the following accounts does NOT belong in the equity section of a balance sheet? A) long-term debt B) preferred stock C) paid-in-surplus D) retained earnings ANSWER A
Liability arising out of which of the following is covered under Coverage E of an unendorsed Homeowners 3 policy? A) use of the insured’s auto on a public road B) use of the insured’s golf cart at a golf course C) use of the insured’s motorcycle on a highway D) use of the insured’s 40-foot […]
Which of the following statements regarding the Coverage E limit in the homeowners policy is true? A) It is an aggregate limit, and once the amount paid for one or more claims reaches the limit, no additional coverage is provided. B) The limit applies only if a court orders the insured to pay—there is no […]
