The three basic types of issues addressed by the study of finance are A) capital budgeting, working capital management, and investment analysis. B) capital structure decisions, working capital management, and sustained profitability. C) capital budgeting, investment analysis, and cash management. D) capital budgeting, capital structure decisions, and working capital management. ANSWER D
Company A and Company B have the same gross profit margin and the same total asset turnover, but company A has a higher return on equity. This may result from A) Company A has a lower debt ratio. B) Company B has more common stock. C) Company A has lower selling and administrative expenses, resulting […]
Ted borrowed $140,000 from ABC Bank to purchase a home and pledged the home as collateral for the loan. Shortly after purchasing the home, Ted lost his job. He could not find another job and could not pay the monthly mortgage. Ted set fire to the home. The claims adjuster suspected arson, and an investigation […]
If the interest rate is positive, then the present value of an annuity due will be less than the present value of an ordinary annuity. Indicate whether the statement is true or false ANSWER FALSE
A fire destroyed the home next door to Brad’s home. The fire department chief was concerned that the damaged home would collapse on to Brad’s home, so he ordered Brad to evacuate his home. Which of the following statements is true concerning the cost of Brad’s hotel room while he is complying with the fire […]
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. […]
When comparing inventory turnover ratios, other things being equal, A) higher inventory turnover results from old or obsolete inventory increasing the inventory balance on the balance sheet. B) a higher inventory turnover is preferred to improve liquidity. C) higher inventory turnover results from an increase in the selling price of the product. D) a lower […]
Following catastrophic hurricane losses, South Coast Insurance Company changed its deductible provision. Rather than using a specified dollar value, $250 for example; the dollar value of the deductible increases with the size of the loss. The type of deductible that South Coast changed to is called a(n) A) calendar-year deductible. B) aggregate deductible. C) straight […]
Cash and credit management are typically the responsibility of the A) treasurer. B) vice president of production and operations. C) controller. D) chief executive officer, or CEO. ANSWER A
