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, […]
Which of the following conclusions would be true if you earn a higher rate of return on your investments? A) The greater the present value would be for any lump sum you would receive in the future. B) Your rate of return would not have any effect on the present value of any sum to […]
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 […]
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 […]
When the corporation sells securities directly to the investment public without involving an investment banker, it is called a privileged subscription. Indicate whether the statement is true or false ANSWER FALSE
All of the following are major rating factors for determining private passenger automobile insurance premiums EXCEPT A) gender. B) age. C) race. D) marital status. ANSWER Answer: C