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 […]
Which of the following is NOT a common characteristic of issuing short-term debt? A) Issuing short-term debt increases uncertainty compared to a long-term fixed-rate issue. B) Issuing short-term debt provides more frequent financing opportunities. C) Short-term interest rates are typically HIGHER than long-term rates. D) Short-term debt financing could be problematic in the event of […]
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
Investment A has an expected return of 15% per year, while Investment B has an expected return of 12% per year. A rational investor will choose A) Investment A if A and B are of equal risk. B) Investment A because of the higher expected return. C) Investment B because a lower return means lower […]
