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
Gail lives near a fault line. She added an earthquake endorsement to her Homeowners 3 policy. All of the following statements about the endorsement are true EXCEPT A) The deductible is expressed as a percentage of the coverage limit rather than as a dollar amount. B) The endorsement also covers landslides and volcanic eruptions. C) […]
Date: September 19th, 2020
Reynolds, Inc. needs to raise $5 million by selling common stock. Reynolds sells 1 million shares of stock at $5 each to Goldman Sachs, who then is responsible for selling the shares to investors. This is an example of a A) privileged subscription. B) commission or best-efforts agreement. C) standby agreement. D) negotiated purchase. […]
Date: September 19th, 2020
In constructing a pro forma balance sheet, which of the following fills the role of being the “plug” figure to balance the balance sheet? A) external financing B) the change in retained earnings C) accounts payable D) accounts receivable ANSWER A
Date: September 19th, 2020
Factors that affect the cost of homeowners insurance include which of the following? I. Construction material II. Deductible amount A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: C
Date: September 19th, 2020
Which of the following statements about the scheduled personal property endorsement to the homeowners policy is (are) true? I. It provides named-perils coverage on scheduled items. II. It can be used to insure valuable items such as jewelry, silverware, and coin collections. A) I only B) II only C) both I and II D) neither […]
Date: September 19th, 2020
Which of the following statements about the personal property replacement cost endorsement used with the homeowners policy is (are) true? I. The damaged or destroyed property must be repaired or replaced, no matter the size of the loss. II. It is designed primarily for antiques and fine art. A) I only B) II only C) […]
Date: September 19th, 2020
A firm whose debt to equity ratio ________ the industry average will ________ future financing flexibility by financing with equity at the next opportunity but doing so may sacrifice earnings per share. A) is less than; maximize B) exceeds; minimize C) exceeds, maximize D) None of the above. ANSWER C
Date: September 19th, 2020
________ refers to the ease with which a firm is able to tap-in to sources of capital. A) Shareholder control B) Financial flexibility C) Risk and timing D) Impact and cost ANSWER B
Date: September 19th, 2020
Benkart Corporation has sales of $5,000,000, net income of $800,000, total assets of $2,000,000, and 100,000 shares of common stock outstanding. If Benkart’s P/E ratio is 12, what is the company’s current stock price? A) $360 per share B) $240 per share C) $96 per share D) $60 per share ANSWER C
Date: September 19th, 2020
