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
Date: September 19th, 2020
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 […]
Date: September 19th, 2020
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. […]
Date: September 19th, 2020
An investment banker assumes underwriting risk in both negotiated purchases and privileged subscriptions with standby agreements. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Which of the following statements is (are) true with respect to the use of credit-based insurance scores as an auto insurance rating factor? I. Insurers claim that drivers who have poor insurance scores are expected to have relatively more accidents. II. The use of insurance scores has been banned as a rating factor in all […]
Date: September 19th, 2020
The goal of most financial managers is to reduce the amount of long-term debt to zero, thus maximizing shareholder wealth. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Which of the following is NOT true regarding mortgaged-backed securities (MBS)? A) The MBS process allows the mortgage bank or other financial institution that made the original mortgage loan to get its money back out of the loan and lend it to someone else. B) Securitization provides liquidity to the mortgage market and makes it […]
Date: September 19th, 2020
Net working capital is equal to gross working capital minus depreciation. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
A balance sheet reflects the current market value of a firm’s assets and liabilities. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The multi-car discount is based on the assumption that A) two cars owned by the same person will not be driven as frequently as one car. B) multiple vehicle owners are safer drivers. C) owners of more than one vehicle are more likely to be financially responsible. D) lower liability limits are needed if there […]
Date: September 19th, 2020
