The Securities and Exchange Commission (SEC) A) regulates both primary and secondary markets. B) regulates initial public offerings, but not seasoned equity offerings, in the primary market. C) regulates only initial public offerings, or IPOs. D) regulates only primary market transactions to ensure investors are provided with adequate and accurate information on new securities. […]
Common stockholders’ equity equals common stock issued minus treasury stock. Indicate whether the statement is true or false ANSWER FALSE
Investors generally don’t like risk. Therefore, a typical investor A) will only accept a zero return if the risk is zero. B) will not be induced to take on any risk. C) will only take on additional risk if he expects to be compensated in the form of additional return. D) will only take on […]
Rob purchased a Personal Auto Policy (PAP) with collision and other-than-collision coverage. Which of the following losses would be covered under his policy? A) Rob wrecked his car while using it as a taxi cab. B) Thieves took Rob’s radar detector from his car. C) A flash flood washed Rob’s car off the road and […]
You decide you want your child to be a millionaire. You have a son today and you deposit $10,000 in an investment account that earns 7% per year. The money in the account will be distributed to your son whenever the total reaches $1,500,000. How old will your son be when he gets the money […]
The relevant variable a financial manager uses to measure returns is A) net income determined using generally accepted accounting principles. B) cash flows. C) dividends. D) earnings per share minus dividends per share. ANSWER B
Angie was injured when her car was struck by a driver who ran a red light. The other driver carried the minimum liability coverage necessary to be considered financially responsible. Angie’s injuries were $15,000 above the minimum bodily injury limit. There is a coverage that can be added to the PAP that applies when a […]
Financing activities have no impact on the income statement, but rather are reflected in changes in long-term debt and short-term debt on the balance sheet. Indicate whether the statement is true or false ANSWER FALSE
Dennis was involved in an accident. He believes the damage to his auto is $7,000. His insurer believes the damage is only $3,500. Which PAP provision is designed to handle disputes between the insurer and the insured over the amount of the loss? A) other insurance provision B) agreed amount endorsement C) coinsurance provision D) […]
Which of the following statements concerning the collision damage waiver when renting an auto is true? I. It relieves the renter from legal liability to third parties arising out of operation of the rented car. II. It relieves the renter from legal liability for the vehicle if it is damaged or stolen. A) I only […]
