How is risk defined? What will be an ideal response? ANSWER Risk means different things to different people, depending on the context and on how they feel about taking chances. While certainly acknowledging these different kinds of risk, we limit our attention to the risk inherent in an investment. In this context, risk […]
Date: September 19th, 2020
Past relationships among variables on the balance sheet and income statement are typically POOR predictors of the future. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Which of the following statements concerning coverage under the Homeowners 3 policy is true? A) If a power failure away from the insured dwelling causes a loss, the loss is covered. B) If a Coverage C peril causes a collapse, the resulting damage is covered. C) If an insured peril damages a portion of a […]
Date: September 19th, 2020
The purpose of the appraisal clause in the Homeowners 3 policy is to A) determine the appropriate amount of homeowners insurance to purchase. B) set a value on the home for estate purposes if the homeowner dies. C) settle valuation disputes between the insurer and insured after a loss has occurred. D) determine a mortgage […]
Date: September 19th, 2020
Joe borrowed $10,000 at 10% per year and promised to pay it back in equal annual installments at the end of each of the next 5 years. Joe’s payment will be $2,100 [($10,000/5 ) + ($10,000 × 10%)]. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
California Retailing Inc has sales of $4,000,000; the firm’s cost of goods sold is $2,500,000; and its total operating expenses are $600,000. The firm’s interest expense is $250,000, and the corporate tax rate is 40%. The firm paid dividends to preferred stockholders of $40,000, and the firm distributed $60,000 in dividend payments to common stockholders. […]
Date: September 19th, 2020
When a company repurchases its own common stock, it is likely that A) the stock price will remain the same as this is simply an internal transaction. B) the stock price will increase because the company views the stock as undervalued. C) the board of directors will be fired for incompetence. D) the stock price […]
Date: September 19th, 2020
Borrowing monies from financial institutions to fund the firm’s revenue growth is an example of which cash-related activity in the cash flow cycle? A) Operating activity B) Profitability activity C) Investing activity D) Financing activity ANSWER D
Date: September 19th, 2020
In a private placement, the securities are offered and sold to a limited number of investors. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Pro forma financial statements are an accountant’s way of looking back to see what “might have been.” Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
