Which of the following statements about covered perils under the personal property coverage (Coverage C) of the Homeowners 3 policy is true? A) Theft losses to boats and watercraft are covered only if they occur at the insured’s residence. B) Damage from an explosion is covered only if the explosion is the result of fire […]
Which of the following is NOT a potential source of outside financing for a corporation? A) new bank loans B) new long-term debt C) sale of new equity D) additions to retained earnings ANSWER D
Wheeler Corporation had retained earnings as of 12/31/10 of $15 million. During 2011, Wheeler’s net income was $7 million. The retained earnings balance at the end of 2011 was equal to $20 million. Therefore, A) Wheeler paid a dividend in 2010 of $5 million. B) Wheeler purchased treasury stock in 2010 for $2 million. C) […]
David has a Homeowners 3 policy that provides $280,000 of insurance on his dwelling, which has a current replacement value of $400,000. Ignoring any deductible, how much will David collect if a roof with a replacement value of $16,000 but an actual cash value of $10,000 is destroyed in a fire? A) $10,000 B) $12,000 […]
You are thinking of adding one of two investments to an already well- diversified portfolio. Security A Security B Expected Return = 14% Expected Return = 16% Standard Deviation of Standard Deviation of Returns = 16% Returns = 20% Beta = 1.2 Beta = 1.2 If you are a risk-averse investor, which one is the […]
How does compound interest differ from simple interest? What will be an ideal response? ANSWER Compound interest occurs when interest paid on the investment during the first period is added to the principal; then, during the second period, interest is earned on this new sum. The situation in which interest is earned on […]
Which of the following is (are) included among the duties of an insured following a loss covered under the Homeowners 3 policy? I. To file a proof of loss within a specified time period after the insurer’s request II. To prepare an inventory of damaged personal property A) I only B) II only C) both […]
The competitive bid purchase is largely confined to railroad, public utility, and municipal bond issues. Indicate whether the statement is true or false ANSWER TRUE
Which of the following is a covered peril under the personal property coverage (Coverage C) of an unendorsed Homeowners 3 policy? A) earthquake B) nuclear radiation C) windstorm D) flood ANSWER Answer: C
The board of directors of Wireless, Inc is considering two compensation plans for the CEO of the company. The first would pay the CEO a salary of $250,000 for the upcoming year. The second would pay the CEO a salary of $100,000 and provide the CEO with a stock option to buy 100,000 shares of […]
