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
Date: September 19th, 2020
It is common to use the change in long-term debt as a “plug” figure in the construction of a pro forma balance sheet. However, if the firm does not have long-term debt, which of the following could substitute as the final plug figure? A) changes in short-term debt B) changes in new equity C) changes […]
Date: September 19th, 2020
All of the following losses are excluded from coverage under Section II of an unendorsed Homeowners 3 policy EXCEPT A) Phyllis, a medical technician, misread a lab test and the patient is suing her. B) While using his canoe, Bert hit another canoe. The other canoe sank. Bert is being sued. C) Violet runs a […]
Date: September 19th, 2020
All of the following are endorsements that can be added to an ISO Homeowners 3 policy EXCEPT: A) personal property replacement cost endorsement. B) scheduled personal property endorsement. C) earthquake endorsement. D) personal liability endorsement. ANSWER Answer: D
Date: September 19th, 2020
Which of the following accounts does NOT belong in the liability section of a balance sheet? A) short-term debt B) additional paid-in capital C) long-term debt D) accruals ANSWER B
Date: September 19th, 2020
Bill saves $3,000 per year in his IRA starting at age 25 and continuing to age 65, when he retires. The amount Bill has in his IRA at age 65 can be characterized as the future value of an annuity. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following losses would be covered under the personal liability coverage (Coverage E) of an unendorsed Homeowners 3 policy? A) liability arising out of the manufacture and sale of illegal narcotics B) liability arising out of damage to a neighbor’s property that occurred over time C) liability arising out of a business operated […]
Date: September 19th, 2020
Of the following different types of securities, which is typically considered most risky? A) common stocks of small companies B) long-term government bonds C) common stocks of large companies D) long-term corporate bonds ANSWER A
Date: September 19th, 2020
Cash flows and profits are synonymous, in other words, higher cash flows equal higher profits Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Negative historical returns are not possible during periods of high volatility (high standard deviations of returns) due to the risk-return trade-off. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
