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 […]
Date: September 19th, 2020
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
Date: September 19th, 2020
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
Date: September 19th, 2020
The creation of value: A) implies that one firm will gain at the expense of others. B) provides benefits to society as scarce resources are directed to their most productive use. C) is not a practical goal since it cannot be measured effectively. D) is achieved only if cash flows exceed accounting profits. […]
Date: September 19th, 2020
Economic value added is calculated by taking (net income less the cost of all capital) times total assets. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Biff deposited $9,000 in a bank account, and 10 years later he closes out the account, which is worth $18,000. What annual rate of interest has he earned over the 10 years? A) 7.18% B) 6.45% C) 10.0% D) 9.10% ANSWER A
Date: September 19th, 2020
Assume that an investor is offered a choice of a risk-free government bond that is expected to return 3.5% or a high-risk corporate stock. According to one of the principles of finance, what would induce the investor to purchase the corporate stock? A) a return that is substantially higher than 3.5% B) cash dividends C) […]
Date: September 19th, 2020
The difference between the price the corporation gets and the public offering price is called the broker-dealer spread. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Which of the following statements is true with respect to a pure no-fault auto insurance plan? A) Under such a plan, you would collect from your own insurer and retain the right to sue the other party if your injuries surpass a dollar or verbal threshold. B) Most no-fault plans that have been adopted by […]
Date: September 19th, 2020
A no-fault law under which benefits are paid to an accident victim without regard to fault and the accident victim can still sue the negligent driver who caused the accident is referred to as a(n) A) pure no-fault law. B) add-on no-fault law. C) modified no-fault law. D) choice no-fault law. ANSWER Answer: […]
Date: September 19th, 2020
