Which of the following statements about uninsured motorists coverage is true? A) An innocent motorist must establish that the uninsured motorist is legally liable. B) The amount of coverage in most states must be at least $300,000. C) Property damage is covered in all states but bodily injury is not covered in all states. D) […]
Economic Value Added attempts to measure a firm’s economic profit rather than its accounting profit. Indicate whether the statement is true or false ANSWER TRUE
The profit and loss (income) statement is compiled on a cash basis. Indicate whether the statement is true or false ANSWER FALSE
After the Personal Auto Policy has been in force for 60 days (or is a renewal policy), all of the following are grounds for the insurer to cancel the policy EXCEPT A) nonpayment of premiums B) the insured’s license to drive is suspended C) the insurer discovers material misrepresentation by the insured in the application […]
The creation of value is driven by what factors? A) Cash flow and growth B) Growth and risk C) Profitability and growth D) Reducing risk ANSWER B Explanation: B) The primary goal of a firm is value creation, and that the creation of value is driven by two key factors: growth and risk.
Variation in the rate of return of an investment is a measure of the riskiness of that investment. Indicate whether the statement is true or false ANSWER TRUE
Criticisms of compulsory insurance laws include which of the following? I. They provide less than complete protection since they require only a minimum amount of liability insurance. II. Even with compulsory insurance laws, a substantial number of motorists continue to operate vehicles without insurance. A) I only B) II only C) both I and II […]
Economic value added includes a charge for the cost of equity that is not included on financial statements prepared according to GAAP. Indicate whether the statement is true or false ANSWER TRUE
Defects of financial responsibility laws include which of the following? I. Accident victims may not be fully compensated for their injuries. II. They apply only to property damage losses, not to bodily injury claims. A) I only B) II only C) both I and II D) neither I nor II ANSWER Answer: A
Under financial responsibility laws, proof of financial responsibility is generally required under which of the following circumstances? A) The use of an auto by any driver with fewer than 3 years of driving experience B) When an individual renews his or her driver’s license C) Failure to pay a final judgment resulting from an auto […]
