Four basic financial statements
1. What are the four basic financial statements and what can
you learn about a company from each one? (Don't tell us what is on each
statement but rather what can you learn by analyzing the statements)
2. Discuss the general factors that influence the quality of
a company's reported earnings and its balance sheet.
Problem 2
Balance Sheet(walmart)
Total assets $10,000,000
Accounts payable $ 2,000,000
Notes payable (8%) 1,000,000
Bonds (10%) 3,000,000
Common stock at par 1,000,000 Contributed capital in excess
of par 500,000
Retained earnings 2,500,000
Total liabilities and stockholders' equity $10,000,000
Question-
Compute the return on stockholders' equity if (walmart) has
sales of $20 million and the following net profit margin: and show ALL work
a. 3 percent
b. 5 percent
Insurance planning
1-Discuss the problem of moral hazard. How does the
insurance company manage this?
Give examples
2-Discuss the concept of income replacement in determining
an insurance need
give examples
Question 1
A life insurance policy is a contract governed by federal
law.
True
False
2.5 points
Question 2
The principal
economic purpose of life insurance is to accumulate capital.
True or False
Question 3
Life issurance is essentially an investment vehicle that
ensures a desired wealth accumulation by the time of death, regardless when
death occurs.
True
False
2.5 points
Question 4
The income replacement approach assumes the insurance should
be equal to the value of the person's future earnings potential to the
surviving family members.
True
False
2.5 points
Question 5
Insurance companies base their mortality assumptions on
the experience of
large groups of people
published mortality
results of other large life insurance companies
federally mandated
mortality tables published by the Treasury Department
the individual
assumptions made by actuaries employed by the company
2.5 points
Question 6
The "multiples-of-salary" method of estimating the
amount of a family's insurance needs is
a rule of thumb
method that determines insurance needs by looking at the number of children in
the family
a method that was
repealed by the Taxpayer Relief Act of 1997
a method combining a
simple rule of thumb method with elements of income replacement and needs
analysis
a method that can be
used only by individuals who are properly licensed with the FAA
2.5 points
Question 7
The income replacement approach to determining a family's
insurance needs is based primarily on?
the earnings growth
rate of long-term U.S. Treasury securities
regulations issued
by the Department of Health and Human Services
the current balance
in the accumulated adjustment account
the human life value
concept
2.5 points
Question 8
All of the following
are primary life insurance planning areas, except
income replacement
and family needs
portfolio value and
allocation of assets between debt and equity instruments
business insurance
needs analysis
estate preservation
and liquidity needs
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