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 […]
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
If a firm takes on ________ it may be downgraded by rating agencies, resulting in ________ interest payments. A) too much incremental debt; lower B) too much incremental debt; higher C) too little incremental debt; lower D) too little incremental debt; higher ANSWER B
