Mike and Susan built their “dream home.” They insured their home for its full replacement cost. They also added an endorsement that will pay up to an additional 20 percent of the policy limit in case the cost of rebuilding the home after a loss is greater than the policy limit. The basis under which […]
Cantanna Inc, is developing a pro forma income statement for the coming year. The chief financial officer estimates that fixed assets are $70,000,000 and that sales will be $300,000,000. If depreciation is historically 20% of fixed assets, what is the expected amount of depreciation for the upcoming year (in dollars)? A) $14,000,000 B) $20,000,000 C) […]
Jose and Maria would like “open-perils” coverage on their home and their personal property. Which unendorsed homeowners form provides this coverage? A) Homeowners 2 B) Homeowners 3 C) Homeowners 4 D) Homeowners 5 ANSWER Answer: D
Financing activities are concerned with: A) determining whether a company’s assets should be financed with debt or equity. B) managing a firm’s cash management procedures. C) managing a firm’s working capital. D) planning sales of a corporation’s equity capital. ANSWER A
Which of the following statements about covered perils and loss settlement under an unendorsed Homeowners 3 policy is true? A) The dwelling is covered on a named-perils basis. B) Personal property losses are settled on an actual cash value basis. C) Losses to the dwelling are always settled on an actual cash value basis. D) […]
Net working capital is equal to A) total assets minus total liabilities. B) total operating capital minus net income. C) current assets minus total liabilities. D) current assets minus current liabilities. ANSWER D
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 […]
Investing activities are concerned with: A) how a firm can best manage its cash flows as they arise in its day-to-day operations. B) vice president of productions and operations. C) managing a firm’s cash budgeting procedures. D) managing a firm’s working capital. ANSWER C
The two principal sources of financing for corporations are A) cash and common equity. B) debt and equity. C) common equity and preferred equity. D) debt and accounts payable. ANSWER B
Michelle had four matching end tables in her home. A fire damaged the home, destroying two of the end tables. Michelle’s home was covered by an unendorsed Homeowners 3 policy. Which of the following is true with regard to the settlement for the end tables in this case? A) Loss to a pair or set […]