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) […]
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
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 […]
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: […]
A rational investor will always prefer an investment with a lower standard deviation of returns, because such investments are less risky. Indicate whether the statement is true or false ANSWER FALSE
Which of the following statements about modified no-fault laws is (are) true? I. Claims less than a certain dollar threshold must be assumed by the injured accident victim, but the injured person has the right to sue a negligent driver. II. Claims above a certain dollar threshold are paid in full by an injured accident […]
What is the present value of $11,463 to be received 7 years from today? Assume a discount rate of 3.5% compounded annually and round to the nearest $1. A) $7,210 B) $5,790 C) $6,508 D) $9,010 ANSWER D
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
