A life insurance company purchases $1 billion of corporate bonds from premiums collected on its life insurance policies. Therefore A) the corporate bonds are indirect securities and the life insurance policies are direct securities. B) the corporate bonds are direct securities and the life insurance policies are indirect securities. C) the corporate bonds are direct […]
Investors want a return that satisfies the following expectation(s): A) An additional return for taking on risk B) A return for delaying consumption C) An additional return for accepting dividends rather than capital gains D) Both A and B. ANSWER D
Which of the following represents an attempt to measure the net results of the firm’s operations (revenues versus expenses) over a given time period? A) balance sheet B) income statement C) sources and uses of funds statement D) statement of cash flows ANSWER B
The time value of money is the opportunity cost of passing up the earning potential of a dollar today. Indicate whether the statement is true or false ANSWER TRUE
Financial ratios that are higher than industry averages may indicate problems that are as detrimental to the firm as ratios that are too low. Indicate whether the statement is true or false ANSWER TRUE
Financial analysis A) uses historical financial statements to measure a company’s performance and in making financial projections of future performance. B) is accounting record-keeping using generally accepted accounting principles. C) uses historical financial statements and is thus useful only to assess past performance. D) relies on generally accepted accounting principles to make comparisons between companies […]
Suppose XYZ Corporation is traded on the New York Stock Exchange. XYZ’s closing price on Monday is $20 per share. After the market closes on Monday, XYZ makes a surprise announcement that it has obtained a major new customer. XYZ’s stock will likely A) open above $20 because the positive news will result in a […]
Corporation B reported earnings per share of $10. Corporation B has 100,000 shares of common stock outstanding and reported an increase in owners’ equity of $400,000 for the period. Corporation B paid $50,000 in interest expense during the period. Corporation B paid dividends per share of A) $14.003. B) $6.00. C) $5.50. D) $6.50. […]
A wealthy private investor providing a direct transfer of funds is called A) a venture capitalist. B) an investment banker. C) an angel investor. D) a financial intermediary. ANSWER C
Which of the following statements about the liability limits of the PAP is (are) true? I. The policy can be written with split limits of liability. II. Prejudgment interest is considered part of the damage award and is subject to the policy limit of liability. A) I only B) II only C) both I and […]
