You have a savings bond that will be worth $750 when it matures in 3 years, but you need cash today. If the current going rate of interest is 5%, what is your bond worth if you sell it today (rounded to the nearest dollar)? A) $675 B) $612 C) $625 D) $648 […]
Ratio analysis enhances our understanding of three basic attributes of performance: liquidity, profitability, and the ability to create shareholder value. Indicate whether the statement is true or false ANSWER TRUE
Which of the following statements is true regarding unsatisfied judgment funds? A) An accident victim can choose to collect from the negligent driver or from the fund. B) The negligent driver is relieved of legal responsibility when the fund makes a payment to the accident victim. C) The maximum amount an individual can collect from […]
Profit maximization is NOT an adequate goal of the firm when making financial decisions because: A) it does not necessarily reflect shareholder wealth maximization. B) it ignores the risk inherent in different projects that will generate the profits. C) it can over-emphasize a project’s short-term returns. D) All of the above. ANSWER D
One benefit payable under a typical no-fault plan is “essential services expenses.” Which of the following would be covered under this benefit? A) funeral expenses B) housekeeping expenses C) hospital bills D) loss of income ANSWER Answer: B
“No pay, no play” laws have which of the following characteristics? A) Uninsured motorists are prevented from suing for noneconomic damages. B) Recovery by accident victims is limited to the amount of liability coverage that they have purchased. C) Driving privileges are automatically terminated if the vehicle operator is stopped by the police and does […]
Alan has been involved in three accidents and has been ticketed for a number of driving violations. He tried to purchase auto insurance, but three insurers refused to sell him coverage. The generic name for state plans designed to insure drivers like Alan is the A) exchange market. B) residual market. C) voluntary market. D) […]
A few states have enacted laws to make minimum amounts of liability insurance available at reduced rates to individuals who cannot afford regular insurance or who have limited financial assets to protect. The coverage made available through such a plan is called A) probationary insurance. B) uninsured motorists insurance. C) no-fault auto insurance. D) low-cost […]
Operating return on assets captures the effect of taxes and financing costs, and hence provides the broadest possible measure of profitability. Indicate whether the statement is true or false ANSWER FALSE
In Maryland, drivers who are unable to obtain auto insurance in the voluntary market are insured through a(n) A) state fund. B) reinsurance facility. C) joint underwriting association D) automobile insurance plan. ANSWER Answer: A