Assume that you expect to hold a $20,000 investment for one year. It is forecasted to have a year end value of $21,000 with a 30% probability; a year end value of $24,000 with a 45% probability; and a year end value of $30,000 with a 25% probability. What is the standard deviation of the […]
Date: September 19th, 2020
Darla purchased an unendorsed Homeowners 3 policy. While the policy was in force, a fire occurred that destroyed a living room set. The living room set cost $4,000 new, but was 25 percent depreciated when the loss occurred. Replacement furniture will cost $4,400. Assuming no deductible, how much will Darla receive from her insurer? A) […]
Date: September 19th, 2020
Which of the following is an additional coverage provided under Section I of the Homeowners 3 policy? A) medical payments to others B) debris removal C) personal liability D) intentional property damage caused by an insured ANSWER Answer: B
Date: September 19th, 2020
A dwelling with a replacement cost of $150,000 was insured under a Homeowners 3 policy for $100,000 at the time the roof was destroyed by a windstorm. The actual cash value of the loss was $9,000, but it will cost $12,000 to replace the roof. Ignoring any deductible, what will the insurer pay to settle […]
Date: September 19th, 2020
For a retailer with inventory to sell, the acid-test ratio will be A) less than the current ratio, thus providing a more stringent measure of liquidity. B) unimportant because it doesn’t include inventory. C) greater than the current ratio, thus providing a more stringent measure of liquidity. D) greater than the current ratio, thus providing […]
Date: September 19th, 2020
You must add one of two investments to an already well- diversified portfolio. Security A Security B Expected Return = 14% Expected Return = 14% Standard Deviation of Standard Deviation of Returns = 15.8% Returns = 19.7% Beta = 1.8 Beta = 1.5 If you are a risk-averse investor, which one is the better choice? […]
Date: September 19th, 2020
Preferred stock is traded in the money market, while common stock is traded in the capital market. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The future value of an annuity will increase if the interest rate goes up, but the present value of the same annuity will decrease as the interest rate goes up. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Shauna purchased a condominium unit. Which homeowners policy is specially designed for condominium unit owners? A) HO-2 B) HO-3 C) HO-4 D) HO-6 ANSWER Answer: D
Date: September 19th, 2020
All of the following are duties of the mortgagee under the standard mortgage clause EXCEPT A) to reimburse the insurer for any loss payments. B) to notify the insurer of any change in ownership of the property of which the mortgagee is aware. C) to provide a proof of loss form if the insured fails […]
Date: September 19th, 2020
