Insurance

David owns a commercial building with a replacement cost of $4 million. The building is insured on a ...

David owns a commercial building with a replacement cost of $4 million. The building is insured on a ...

David owns a commercial building with a replacement cost of $4 million. The building is insured on a replacement cost basis for $2.4 million under a fire insurance policy that has an 80 percent coinsurance clause. How much will David collect if the b

chouri   447   3 Replies

Tanyatorn Wattanasirang

In a specific wager, Pat is paid $5.00 if the price of ABC Corp. is above $85.00. Currently, ABC ...

In a specific wager, Pat is paid $5.00 if the price of ABC Corp. is above $85.00. Currently, ABC ...

In a specific wager, Pat is paid $5.00 if the price of ABC Corp. is above $85.00. Currently, ABC Corp. price is $75.00, σ = 0.25, r = 0.04, div = 0 and the wager lasts 6 months. Pat is paid one share of ABC Corp. stock if the price is below $85.00. W

elf_fu   145   2 Replies

Nishant Agarwal

Consider a two-period binomial model, where each period is 6 months. Assume the stock price is ...

Consider a two-period binomial model, where each period is 6 months. Assume the stock price is ...

Consider a two-period binomial model, where each period is 6 months. Assume the stock price is $75.00, σ = 0.35, and r = 0.05. An American call option with a strike price of $80 would be exercised early at what dividend yield?
A) 5.0%
B) 7.

elf_fu   257   3 Replies

Aaditya Singh

A stock is valued at $28.00. The annual expected return is 9.0% and the standard deviation of ...

A stock is valued at $28.00. The annual expected return is 9.0% and the standard deviation of ...

A stock is valued at $28.00. The annual expected return is 9.0% and the standard deviation of annualized returns is 19.0%. If the stock is lognormally distributed, what is the expected price after 4 years?
A) $28.00
B) $32.33
C) $40.13

elf_fu   263   2 Replies

Zijian An

The spot price of gasoline is 258 cents per gallon and the annualized risk free interest rate is ...

The spot price of gasoline is 258 cents per gallon and the annualized risk free interest rate is ...

The spot price of gasoline is 258 cents per gallon and the annualized risk free interest rate is 4.0%. Given a lease rate of 1.0%, a continuously paid storage rate of 0.5%, and a convenience yield of 0.75%, what is the no-arbitrage price range of a 1

elf_fu   527   5 Replies

Fernando Vargas

Ted Thomas is risk manager of XYZ Company. He is concerned his company might be sued by current or ...

Ted Thomas is risk manager of XYZ Company. He is concerned his company might be sued by current or ...

Ted Thomas is risk manager of XYZ Company. He is concerned his company might be sued by current or former employees alleging wrongful termination, failure to promote, racial or gender discrimination, or sexual harassment. What type of liability insur

AzJose   197   2 Replies

Dylan Burden

Assume that a $60 strike call pays a 1.0% continuous dividend, r = 0.05, σ = 0.28, and the stock ...

Assume that a $60 strike call pays a 1.0% continuous dividend, r = 0.05, σ = 0.28, and the stock ...

Assume that a $60 strike call pays a 1.0% continuous dividend, r = 0.05, σ = 0.28, and the stock price is $62.00. What is the profit or loss per share if on a long call position, with 73 days until expiration, the price immediately rises to $63.00?

elf_fu   217   2 Replies

Anqi Zuo

You wish to create a synthetic forward rate agreement in which you would lock in a return between ...

You wish to create a synthetic forward rate agreement in which you would lock in a return between ...

You wish to create a synthetic forward rate agreement in which you would lock in a return between 150 and 310 days. The price of a 150-day zero coupon bond is 0.9823 and the price of 310-day zero coupon bond is 0.9634. What are the transactions used

elf_fu   190   3 Replies

Shanmukha Rao Kosuri

Which of the following situations does NOT describe someone who should implement a hedge strategy?

Which of the following situations does NOT describe someone who should implement a hedge strategy?

Which of the following situations does NOT describe someone who should implement a hedge strategy?
A) Mary is very nervous about losing profits if selling prices drop
B) Melanie's creditors will not lend her money if her crops might lo

elf_fu   255   3 Replies

Charles de Gaulle

Can risk be completely eliminated?

Can risk be completely eliminated?

Can risk be completely eliminated?
A) No, never
B) Yes, as long as the exposure units are positively correlated
C) Yes, as long as the exposure units are not correlated and enough are in the pool
D) Yes, as long as the correlation

medulla   230   2 Replies

RenaeMalaya

Peggy is an independent insurance agent who places substantial amounts of business with XYZ ...

Peggy is an independent insurance agent who places substantial amounts of business with XYZ ...

Peggy is an independent insurance agent who places substantial amounts of business with XYZ Insurance Company. XYZ pays Peggy a bonus when she meets a sales goal. XYZ also allows Peggy to recruit and train sub-agents. She receives additional commissi

JamesLu   161   3 Replies

Timah

Assume oat forward prices over the next 3 years are $2.25, $2.35, and $2.28, respectively. Effective ...

Assume oat forward prices over the next 3 years are $2.25, $2.35, and $2.28, respectively. Effective ...

Assume oat forward prices over the next 3 years are $2.25, $2.35, and $2.28, respectively. Effective annual interest rates over the same period are 5.2%, 5.5%, and 5.8%. What is the
2-year swap price on a hypothetical "forward swap" t

elf_fu   290   3 Replies

chrisor

Frank is doing some life insurance planning. A financial advisor said, "be sure to consider ...

Frank is doing some life insurance planning. A financial advisor said, "be sure to consider ...

Frank is doing some life insurance planning. A financial advisor said, "be sure to consider Social Security when examining sources of funds available for family support if you die." The financial advisor was referring to which Social Securi

JamesLu   167   2 Replies

tlewis

Risk managers are concerned with policy limits and deductible size contained in insurance contracts ...

Risk managers are concerned with policy limits and deductible size contained in insurance contracts ...

Risk managers are concerned with policy limits and deductible size contained in insurance contracts because:
A) an increased deductible amount increases the policy's premium
B) the policy limit and the deductible are the only determina

keyone   137   3 Replies

binbongbang

Which of the following is not a form of internal loss-financing technique?

Which of the following is not a form of internal loss-financing technique?

Which of the following is not a form of internal loss-financing technique?
A) Hedging
B) Risk retention
C) Self-insurance
D) Captive insurance

medulla   139   2 Replies

HitZz Ahuja

State X hired Build-Right Construction to build a bridge. State X required that construction be ...

State X hired Build-Right Construction to build a bridge. State X required that construction be ...

State X hired Build-Right Construction to build a bridge. State X required that construction be completed within 2 years after the contract was signed. Les Johnson is the president of Build-Right. State X required that Build-Right's promise to p

AzJose   212   2 Replies

AzJose

Appliance World sells small appliances. The store purchased an ISO crime coverage policy. Last ...

Appliance World sells small appliances. The store purchased an ISO crime coverage policy. Last ...

Appliance World sells small appliances. The store purchased an ISO crime coverage policy. Last night, someone used a crowbar to pry open a locked door, leaving marks of forced entry. The thief took a number of appliances. The crime that occurred in t

AzJose   184   2 Replies

AzJose

Fifth National Bank decided to loan $200,000 to Fred Franklin. As collateral for the loan, Fred ...

Fifth National Bank decided to loan $200,000 to Fred Franklin. As collateral for the loan, Fred ...

Fifth National Bank decided to loan $200,000 to Fred Franklin. As collateral for the loan, Fred posted stock certificates. When Fred defaulted on the loan, Fifth National tried to sell the stock. They discovered the stock certificates were stolen fro

AzJose   187   2 Replies

AzJose

Which of the following statements is (are) true with respect to financial institution ...

Which of the following statements is (are) true with respect to financial institution ...

Which of the following statements is (are) true with respect to financial institution bonds?
I.   Fidelity coverage covers losses resulting from the dishonest acts of employees.
II.   Financial institutions usually insure their crime exposures

AzJose   141   2 Replies

AzJose

Which of the following statements is (are) true with regard to the ISO commercial crime coverage ...

Which of the following statements is (are) true with regard to the ISO commercial crime coverage ...

Which of the following statements is (are) true with regard to the ISO commercial crime coverage forms?
I.   The discovery version only covers losses which occur during the policy period.
II.   The loss-sustained version covers losses which occ

AzJose   132   2 Replies

AzJose

Holiday DeCor Company is insured by a commercial general liability policy (CGL). Holiday DeCor ...

Holiday DeCor Company is insured by a commercial general liability policy (CGL). Holiday DeCor ...

Holiday DeCor Company is insured by a commercial general liability policy (CGL). Holiday DeCor rented a storage facility for one month to store some excess inventory. While visiting the storage facility, a Holiday DeCor employee discarded a cigarette

AzJose   166   2 Replies

AzJose

Jenkins Company purchased a commercial umbrella policy with a $10 million limit and a $100,000 ...

Jenkins Company purchased a commercial umbrella policy with a $10 million limit and a $100,000 ...

Jenkins Company purchased a commercial umbrella policy with a $10 million limit and a $100,000 self-insured retention. The insurer required Jenkins Company to carry a $1 million per-occurrence limit on its general liability policy and a $1 million pe

AzJose   162   2 Replies

AzJose

Medical malpractice insurance written on a claims-made basis can leave a surgeon vulnerable to ...

Medical malpractice insurance written on a claims-made basis can leave a surgeon vulnerable to ...

Medical malpractice insurance written on a claims-made basis can leave a surgeon vulnerable to malpractice claims if the surgeon retires, changes insurers, or drops coverage. A provision can be added to the claims-made form that protects the surgeon

AzJose   156   2 Replies

AzJose

Which of the following statements about errors and omissions insurance is (are) true?I.It is ...

Which of the following statements about errors and omissions insurance is (are) true?I.It is ...

Which of the following statements about errors and omissions insurance is (are) true?
I.   It is purchased by professionals to protect against claims arising for negligent acts, errors, and omissions.
II.   It is designed to meet the needs of s

AzJose   123   2 Replies

AzJose

Which of the following is covered under the liability coverage of a businessowners policy?

Which of the following is covered under the liability coverage of a businessowners policy?

Which of the following is covered under the liability coverage of a businessowners policy?
A) damage to the insured's property
B) bodily injury liability
C) automobile liability
D) professional liability

AzJose   123   2 Replies

AzJose

Which of the following losses is generally covered under a commercial umbrella policy?

Which of the following losses is generally covered under a commercial umbrella policy?

Which of the following losses is generally covered under a commercial umbrella policy?
A) liability arising out of workers compensation laws
B) liability arising out of pollution
C) liability arising out of use of a business auto

AzJose   141   2 Replies

AzJose

Which of the following statements regarding employer liability insurance under the workers ...

Which of the following statements regarding employer liability insurance under the workers ...

Which of the following statements regarding employer liability insurance under the workers compensation insurance coverage form is (are) true? 
I.   Employer liability insurance covers an employee injury that occurs on the job but may not be

AzJose   135   2 Replies

AzJose

Which of the following exposures is covered under a Commercial General Liability Policy with no ...

Which of the following exposures is covered under a Commercial General Liability Policy with no ...

Which of the following exposures is covered under a Commercial General Liability Policy with no endorsements?
A) liability arising out of seepage of pollutants
B) employment-related practices liability
C) personal injury liability

AzJose   163   2 Replies

AzJose

The business income and extra expense coverage form covers loss of business income and continuing ...

The business income and extra expense coverage form covers loss of business income and continuing ...

The business income and extra expense coverage form covers loss of business income and continuing normal operating expenses. How is business income (revenue) defined?
A) total sales
B) total sales less cost of goods sold
C) pre-tax n

AzJose   157   2 Replies

AzJose

The exterior walls, the roof, and the plumbing, heating and air conditioning systems of a ...

The exterior walls, the roof, and the plumbing, heating and air conditioning systems of a ...

The exterior walls, the roof, and the plumbing, heating and air conditioning systems of a residential condominium can be insured through the purchase of which of the following forms?
I.   Condominium association coverage form
II.   Condominium

AzJose   165   2 Replies

AzJose

Frank's property insurance requires periodic reporting of inventory values. Frank believes he can ...

Frank's property insurance requires periodic reporting of inventory values. Frank believes he can ...

Frank's property insurance requires periodic reporting of inventory values. Frank believes he can save money by under-reporting the inventory. Last period, Frank reported $200,000 when the value was really $400,000. Shortly after filing the repo

AzJose   142   2 Replies

AzJose

All of the following statements about the businessowners policy are true EXCEPT

All of the following statements about the businessowners policy are true EXCEPT

All of the following statements about the businessowners policy are true EXCEPT
A) Coverage for business personal property includes coverage for leased personal property which the named insured has a contractual responsibility to insure.
B)

AzJose   152   2 Replies

AzJose

Reimbursement for spoilage of frozen food caused by failure of a refrigeration unit at a frozen ...

Reimbursement for spoilage of frozen food caused by failure of a refrigeration unit at a frozen ...

Reimbursement for spoilage of frozen food caused by failure of a refrigeration unit at a frozen foods processor can be covered under
A) equipment breakdown insurance.
B) extra expense insurance.
C) builders risk insurance.
D) diff

AzJose   174   2 Replies

AzJose

All of the following statements about business income insurance are true EXCEPT

All of the following statements about business income insurance are true EXCEPT

All of the following statements about business income insurance are true EXCEPT
A) Business income is defined as total sales that would have been made if the loss had not occurred.
B) Payroll is considered a continuing normal operating expe

AzJose   140   2 Replies

AzJose

Which of the following forms is used to insure buildings that are under construction?

Which of the following forms is used to insure buildings that are under construction?

Which of the following forms is used to insure buildings that are under construction?
A) builders risk coverage form
B) floor plan coverage form
C) new construction coverage form
D) labor and materials coverage form

AzJose   143   2 Replies

AzJose

Which of the following statements about the extra expense coverage form is (are) true?I.It provides ...

Which of the following statements about the extra expense coverage form is (are) true?I.It provides ...

Which of the following statements about the extra expense coverage form is (are) true?
I.   It provides coverage for the increased cost that must be paid to continue operations during a period of restoration.
II.   It provides coverage for lost

AzJose   135   2 Replies

AzJose

One of the additional coverages under the building and personal property coverage form is ...

One of the additional coverages under the building and personal property coverage form is ...

One of the additional coverages under the building and personal property coverage form is "increased cost of construction." The coverage is payable if
A) a skilled artisan is needed to duplicate the construction of the damaged property

AzJose   143   2 Replies

AzJose

Tom and Nancy Boyle were surprised to learn that some of their valuable personal property—a gun ...

Tom and Nancy Boyle were surprised to learn that some of their valuable personal property—a gun ...

Tom and Nancy Boyle were surprised to learn that some of their valuable personal property—a gun collection, jewelry, a mink coat, and sterling silverware—was subject to internal limits under their homeowners policy. What separate insurance policy can

AzJose   148   2 Replies

AzJose

Tina purchased a personal umbrella policy with a $1 million limit and a $1,000 self-insured ...

Tina purchased a personal umbrella policy with a $1 million limit and a $1,000 self-insured ...

Tina purchased a personal umbrella policy with a $1 million limit and a $1,000 self-insured retention. Her insurer required her to carry a $300,000 liability limit under her homeowners policy. Tina was held responsible for slandering a public officia

AzJose   131   2 Replies

AzJose

Len is considering the purchase of a home. As a home is a large investment, Len wants to make sure ...

Len is considering the purchase of a home. As a home is a large investment, Len wants to make sure ...

Len is considering the purchase of a home. As a home is a large investment, Len wants to make sure that there are no liens, easements, or other encumbrances preventing him from an unchallenged right to possess and enjoy his property. Len can protect

AzJose   144   2 Replies

AzJose