Glenda insured her home for its full replacement cost under an unendorsed Homeowners 3 policy. Which of the following statements is true? A) The dwelling and other structures are covered on a named-perils basis. B) Losses to personal property are settled on a replacement cost basis. C) The personal property is covered on an open-perils […]
Working capital management is concerned with A) how a firm can best manage its cash flows as they arise in its day-to-day operations. B) managing a firm’s capital stock. C) how a firm should raise money to fund its investments. D) what long-term investments a firm should undertake. ANSWER A
If the insurer broadens coverage during the policy period without an increase in premium, and the broadened coverage is not part of a general program revision, the insured is entitled to the broadened coverage under which policy provision? A) waiver of policy provisions B) subrogation C) liberalization clause D) pair or set clause […]
John has to pay $1,000 per month for his mortgage for another 5 years, but he is considering paying the mortgage off in one lump sum. John cannot calculate the present value of the payments using the annuity formulas because his payments are monthly and not once per year. Indicate whether the statement is true […]
Ensuring that there is adequate cash to pay the firm’s suppliers 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 A
Pro forma income statements are primarily based on forecasted sales and assumed relationships related to sales. Indicate whether the statement is true or false ANSWER TRUE
All of the following statements about balance sheets are true EXCEPT A) Assets – Liabilities = Shareholders’ Equity. B) balance sheets show average asset balances over a one-year period. C) a balance sheet reports a company’s financial position at a specific point in time. D) assets are reported at historical cost. ANSWER B
What information does a firm’s balance sheet provide to the viewing public? A) a complete listing of all of a firm’s cash receipts and cash expenditures for a defined period of time B) an itemization of all of a firm’s assets, liabilities, and equity as of the balance sheet date C) a report of investments […]
If there is a conflict between state law and a provision in a homeowners policy, A) the policy wording takes precedence. B) the state law takes precedence. C) the policyholder is entitled to whichever provides broader coverage. D) the policy is null and void. ANSWER Answer: B
One additional coverage under the homeowners policy makes available up to 10 percent of the Coverage A limit to cover increased repair costs after a loss in order to comply with a stricter building code. This additional coverage is called A) ordinance or law. B) reasonable repairs. C) concurrent causation. D) debris removal. […]
