Liquidity refers to the ability to quickly convert an asset into cash without lowering the selling price. Indicate whether the statement is true or false ANSWER TRUE
In measuring value, the firm’s focus should be on: A) cash flow. B) accounting profits. C) time value of money. D) earnings per share. ANSWER A
Investment banking firms are prohibited from selling securities due to conflicts of interest. Indicate whether the statement is true or false ANSWER FALSE
The syndicate can be thought of as a wholesaler of securities and the dealer organization as a retailer of securities. Indicate whether the statement is true or false ANSWER TRUE
A credit-based score that insurers claim is highly predictive of future claims costs is an individual’s A) combined ratio. B) loss ratio. C) insurance score. D) underwriting score. ANSWER Answer: C
No-fault benefits are provided by adding an endorsement to the auto insurance policy. What is this endorsement typically called? A) uninsured motorists coverage B) personal injury protection coverage C) nonowned vehicle liability coverage D) add-on benefits coverage ANSWER Answer: B
Amber believes that her auto insurance premium is too high. Which of the following would most likely lower Amber’s premium? A) Amber could increase her physical damage deductible. B) Amber could move from the rural area where she lives to an urban or suburban area. C) Amber could increase the amount of liability insurance that […]
Which of the following goals of the firm are synonymous with the maximization of shareholder wealth? A) Profit maximization B) Risk minimization C) Maximization of the total market value of the firm’s common stock D) None of the above ANSWER C
Scott had trouble obtaining auto insurance. After three companies refused to insure him, he called the state insurance department. A representative suggested he obtain coverage through Last Chance Insurance Company because “that’s all they insure—high-risk drivers.” Scott contacted Last Chance. He was not refused coverage; however, the premium Scott was required to pay was three […]
In the state where Susan lives, drivers whom private insurance companies do not want to insure are placed in a common pool, and each insurer pays its pro rata share of pool losses and expenses. A common policy is used for all high-risk drivers. Susan’s state handles high-risk drivers through a(n) A) automobile insurance plan. […]