A pro forma balance sheet typically begins with liabilities and then we estimate the assets. Indicate whether the statement is true or false ANSWER FALSE
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 […]
The current ratio of a firm would be increased by which of the following? A) Land held for investment is sold for cash. B) Inventories are sold for cash. C) Inventories are sold on a credit basis. D) Equipment is purchased, financed by a long-term debt issue. ANSWER A
The value of a bond investment, which provides fixed interest payments, will increase when discounted at an 8% rate rather than at an 11% rate. Indicate whether the statement is true or false ANSWER TRUE
Which of the following statements is (are) true concerning the home business insurance coverage endorsement? I. It increases the coverage on business personal property at the insured residence from $2,500 to the Coverage C limit. II. It excludes coverage for liability arising out of the home business. A) I only B) II only C) both […]
John purchased an unendorsed Homeowners 3 policy. The coverage will expire next month. Which of the following changes will lower the premium that John will pay? A) reducing the deductible B) adding a replacement cost endorsement for personal property C) switching to an HO-2 policy D) adding a personal injury endorsement ANSWER Answer: […]
The main duties of financial managers are: A) assessing the current business situation and future financing needs. B) developing long-term financing strategies. C) assessing future investments. D) All of the above. ANSWER D
Which of the following statements regarding Section II conditions under the homeowners policy is true? A) Other insurance is handled on a pro rata basis. B) Under no circumstances may the insured bring a lawsuit against the insurer. C) The liability limit is the same regardless of the number of persons injured in a covered […]
A credit-based score that is highly predictive of future claims cost is an individual’s A) CLUE score. B) insurance score. C) motor vehicle record score. D) underwriting score. ANSWER Answer: B
Which of the following statements is (are) true concerning the use of an individual’s credit history as an insurance rating factor? I. Individuals with poor credit histories, as a group, generally file fewer homeowners claims than do individuals with good credit histories. II. A poor credit history can be improved over time, allowing for the […]