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
Janet was unable to obtain auto insurance in the voluntary insurance market. She was contacted by the state insurance department and notified that XYZ Insurance would be her insurer. The mechanism used in Janet’s state to provide auto insurance to high-risk drivers is a(n) A) automobile insurance plan. B) joint underwriting association. C) specialty automobile […]
The “perfect storm” of factors that contributed to the economic crisis of 2007 include A) agency costs, inefficient markets, and perfect capital markets. B) poorly chosen mortgage loans, falling housing prices, and a contracting economy. C) financial deregulation, unchecked commodity prices, floating currency exchange rates. D) increases in the minimum wage rate, unchecked illegal immigration, […]
You plan to go to Asia to visit friends in three years. The trip is expected to cost a total of $10,000 at that time. Your parents have deposited $5,000 for you in a Certificate of Deposit paying 6% interest annually, maturing three years from now. Uncle Lee has agreed to pay for all remaining […]
Bill was severely injured by an uninsured driver. Bill did not purchase uninsured motorists coverage, and the other driver, although held liable, could not pay the damages awarded. After exhausting other sources of recovery, Bill learned that his state is one of a few states that has a special fund to compensate innocent accident victims. […]
A state law that requires individuals who have been involved in an auto accident or who have been convicted for certain vehicle-related offenses to demonstrate the ability to pay liability claims up to a specified dollar amount is called a(n) A) financial responsibility law. B) compulsory insurance law. C) unsatisfied judgment fund law. D) “no […]
The computation of return on equity, or ROE, does not include retained earnings as part of common equity because retained earnings includes all net income for the company since its inception and analysts are trying to calculate the return for just the current year. Indicate whether the statement is true or false ANSWER […]
