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. […]
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
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 […]
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
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 […]
The negotiated purchase is the most prevalent method of securities distribution in the private sector. Indicate whether the statement is true or false ANSWER TRUE
A few states have dual automobile insurance systems. A motorist can pay a higher premium and retain the right to sue under the tort system, or pay a lower premium and be covered under the state’s no-fault law. This dual system is called a A) pure no-fault plan. B) modified no-fault plan. C) “no pay, […]
If managers are making decisions to maximize shareholder wealth, then they are primarily concerned with making decisions that should: A) positively affect profits. B) increase the market value of the firm’s common stock. C) either increase or have no effect on the value of the firm’s common stock. D) Accomplish all of the above. […]
As of today, the most severe economic crisis to afflict the United States economy is considered to be A) the Savings and Loan Crisis of 1978-1982. B) the Great Recession of 2007-2009. C) the Reagan Tax Law Changes of 1985. D) the Great Depression of the 1930s. ANSWER D