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4735-finance

Subject: Financial Management
Details: 1.A prpoperty and casualty company's revenue for a year is generated from _________.
a. the premium income for policies written during the year
b. claim expenses depreciated against the real assets of the company
c. investment income resulting from the investment of both the reserves established to pay off future claims and the property and casualty company's surplus
d. Both a cnd c

2. The prices of bonds with ________ are most sensitive to interest rate movements.
a. zero-coupon payments
b. small-coupon payments
c. high-coupon payments
d. None of the above; the size of the coupon does not affect sensitivity of the bond prices

3.Bought deals expose investment banking firms to ___________ capital risk than traditional underwriting.
a. greater
b. less
c. the same
d. none of the above

4. Because of imperfections in markets, investors needs the services of _________.
a. dealers
b. brokers
c. seurity regulators
d. All of the above

5. Which of the following is false?
a. The dominant OTC market for stock in the U. S. is the NASDAQ.
b. One effect of operational efficency has been the decline in bid-ask spread to a level of one cent.
c. If securities are more liquid, a call auction trading system is more appropriate.
d. The minimum bid-offer spread in 2001 is one cent.
e. None of the above.

Solution Preview

1.A property and casualty company's revenue for a year is generated from
<br>Answer) Think about who there clients are. There clients are people/institutions who buy policies from them. Hence there primary source of income is from premiums. Hence part a is right. Now, the question comes, is it likely that the premium collected for this year will all be used to satisfy claims? Answer is no, if they are any good at what they are doing, they should have surplus. Thus, they will invest the surplus and get additional income ...

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