How managers choose to finance the business does not affect the rate of return to shareholders because the rate of return is based on how the company uses the assets it has, not whether or not they paid for the assets with debt or equity. Indicate whether the statement is true or false […]
The need for extensive regulation of investment banking firms is limited due to the highly competitive nature of that industry. Indicate whether the statement is true or false ANSWER FALSE
How much money do I need to place into a bank account that pays a 1.08% rate in order to have $500 at the end of 7 years? A) $629.51 B) $463.78 C) $751.81 D) $332.54 ANSWER B
How much money must be put into a bank account yielding 6.42% (compounded annually) in order to have $1,671 at the end of 11 years (round to nearest $1)? A) $798 B) $921 C) $886 D) $843 ANSWER D
Which of the following statements about joint underwriting associations for insuring high-risk drivers is (are) true? I. Underwriting losses are proportionately shared by all auto insurers based on premiums written in the state. II. Each company participating in a joint underwriting association sets it own rates. A) I only B) II only C) both I […]
Which of the following statements about unsatisfied judgment funds is (are) true? I. An accident victim must obtain a judgment against the motorist who caused an accident and must show the judgment cannot be collected. II. The major disadvantage is that the negligent uninsured motorist is relieved of legal liability. A) I only B) II […]
Under which type of automobile insurance arrangement are all automobile insurers in a state assigned their proportionate share of high-risk drivers based on the total volume of automobile business written in the state? A) automobile insurance plan B) unsatisfied judgment fund C) reinsurance facility D) specialty automobile plan ANSWER Answer: A
Assume that you won the Lotta Dough Lotto jackpot for $20 million. Further assume that you were offered a choice to receive the $20 million today, or receive it in equal installments of $1 million per year for 20 years. According to one of the principles of finance, which would you take? A) the $20 […]
Under current accounting rules, the plant and equipment account shows the historical cost (purchase price) of, plus any subsequent improvements to, the plant and equipment. Indicate whether the statement is true or false ANSWER TRUE
The term used to describe plans in which automobile insurers participate to make insurance available to drivers unable to obtain coverage in the standard market is the A) foreign market. B) fair market. C) residual (shared) market. D) high-premium market. ANSWER Answer: C