Home
Subjects
Textbook solutions
Create
Study sets, textbooks, questions
Log in
Sign up
Upgrade to remove ads
Only $35.99/year
Social Science
Business
Insurance
insurance everfi module 7
STUDY
Flashcards
Learn
Write
Spell
Test
PLAY
Match
Gravity
Terms in this set (29)
an example of a risk management strategy is...
both a and c
what is a risk management strategy you could use to protect your home?
a and b
how is having a security system for you home a risk management strategy?
the security system will alert authorities and deter criminals, protecting your valuables and property
an insurance premium is...
the amount of money you pay for an insurance policy
when filing an insurance claim, the policyholder must pay a _______, which is the amount you owe before insurance will cover the rest of the bill
deductible
what will collision insurance cover in the event of an accident
damage to your car
liability insurance is...
insurance that will pay for injury to another driver and/or damage to their car if you are in an accident
collision insurance is...
insurance that will pay to get your car fixed in the event of an accident
what does liability insurance not cover in the event of an accident?
injury to yourself
what do people purchase as a form of risk management to protect themselves from losing a lot of money in the event something happens to them or their property
insurance
why should you purchase insurance?
to prevent a financial burden in the case of an accident, theft, or another event
why is it important to have insurance?
a and b
what can insurance protect you from?
a and c
which of the following is not an advtange of having health insurance?
people with health insurance can skip lines in emergency rooms
when is it ok not to have health insurance?
you should always have health insurance
what is a consequence of not having health insurance?
you must pay all costs for health care and medical emergencies
something people buy to protect themselves from losing a lot of money in the event something happens to them or their property is known as...
insurance
all of the following are true about health insurance except:
being young and healthy means you can skip out on health insurance
an insurance deductible is...
the amount you owe before insurance will cover the rest of the bill
if you get into a car accident, your ______ may increase because you will be considered riskier for insurance companies to covee
insurance premium
insurance that covers damage to your car from an accident is called...
collision insurance
which is not an example of a risk management strategy?
buying a new car
a deductible is paid by...
the policyholder
how can insurance protect you from financial loss?
insurance can cover you or your property in case of an accident, theft, or another unpredictable event
choose the statement that is true about health insurance
you should always have health insurance, regardless of your circumstances
which of the following is a reason someone should get health insurance?
health insurance protects you financially from medical emergencies
buying a home security system is an example of protecting your home against _______
risk
insurance that will pay for injury to another driver and/or damage to their car if you are in an accident is called...
liability insurance
wearing a seat belt, not texting when driving, and driving carefully are all examples of...
risk management strategies
Sets with similar terms
chapter 6 personal finance
40 terms
Personal finance unit 6
50 terms
(SSEPF5) Insurance
35 terms
Module 6: Insurance vocabulary
43 terms
Sets found in the same folder
finanacing higher education everfi module 6
28 terms
Consumer Skills EverFi Module 4
26 terms
Lesson 3 - Budgeting
30 terms
everfi module 1-6 (business finance)
85 terms
Other sets by this creator
Starbucks new trainee for BAR
14 terms
Le gaspillage alimentaire
27 terms
history
16 terms
House & Senate
22 terms
Verified questions
QUESTION
Is it possible to construct a portfolio of real-world stocks that has a required return equal to the risk-free rate? Explain.
QUESTION
You have been asked to make arrangements for an off-site meeting for your company. A local hotel charges $250 to rent a conference room for a half day and$400 for a full day. The hotel charges $18 per person for each lunch served and$35 per person for each dinner served. How much will it cost to rent the conference room for two and one-half days and to provide lunch and dinner for 16 people for two days?
QUESTION
You have applied for a job with a local bank. As part of its evaluation process, you must take an examination on time value of money analysis covering the following questions: a. Draw time lines for (1) a $100 lump sum cash flow at the end of Year 2; (2) an ordinary annuity of$100 per year for 3 years; and (3) an uneven cash flow stream of −$50,$100, $75, and$50 at the end of Years 0 through 3. b. 1. What’s the future value of $100 after 3 years if it earns 4%, annual compounding? 2. What’s the present value of$100 to be received in 3 years if the interest rate is 4%, annual compounding? c. What annual interest rate would cause $100 to grow to$119.10 in 3 years? d. If a company’s sales are growing at a rate of 10% annually, how long will it take sales to double? e. What’s the difference between an ordinary annuity and an annuity due? What type of annuity is shown here? How would you change it to the other type of annuity? $$ \begin{matrix} \text{0} & \text{1} & \text{2} & \text{3}\\ \text{0} & \text{\$ 100} & \text{\$ 100} & \text{\$ 100}\\ \end{matrix} $$ f. 1. What is the future value of a 3-year, $100 ordinary annuity if the annual interest rate is 4%? 2. What is its present value? 3. What would the future and present values be if it was an annuity due? g. A 5-year$100 ordinary annuity has an annual interest rate of 4%. 1. What is its present value? 2. What would the present value be if it was a 10-year annuity? 3. What would the present value be if it was a 25-year annuity? 4. What would the present value be if this was a perpetuity? h. A 20-year-old student wants to save $5 a day for her retirement. Every day she places$5 in a drawer. At the end of each year, she invests the accumulated savings ($1,825) in a brokerage account with an expected annual return of 8%. 1. If she keeps saving in this manner, how much will she have accumulated at age 65? 2. If a 40-year-old investor began saving in this manner, how much would he have at age 65? 3. How much would the 40-year-old investor have to save each year to accumulate the same amount at 65 as the 20-year-old investor? i. What is the present value of the following uneven cash flow stream? The annual interest rate is 4%.$ $$ \begin{matrix} \text{0} & \text{4\\%} & \text{1} & \text{2} & \text{3} & \text{4 Years}\\ \text{0} & \text{ } & \text{\$ 100} & \text{\$ 300} & \text{\$ 300} & \text{-\$ 50}\\ \end{matrix} $$ $j. 1. Will the future value be larger or smaller if we compound an initial amount more often than annually (e.g., semiannually, holding the stated (nominal) rate constant)? Why? 2. Define (a) the stated (or quoted or nominal) rate, (b) the periodic rate, and (c) the effective annual rate (EAR or EFF%). 3. What is the EAR corresponding to a nominal rate of 4% compounded semiannually? Compounded quarterly? Compounded daily? 4. What is the future value of$100 after 3 years under 4% semiannual compounding? Quarterly compounding? k. When will the EAR equal the nominal (quoted) rate? l. 1. What is the value at the end of Year 3 of the following cash flow stream if interest is 4% compounded semiannually? (Hint: You can use the EAR and treat the cash flows as an ordinary annuity or use the periodic rate and compound the cash flows individually.) $$ \begin{matrix} \text{0} & \text{0} & \text{2} & \text{0} & \text{4} & \text{0} & \text{6 Periods}\\ \text{0} & \text{ } & \text{\$ 100} & \text{ } & \text{\$ 100} & \text{ } & \text{\$ 100}\\ \end{matrix} $$ 2. What is the PV? 3. What would be wrong with your answer to parts l(1) and l(2) if you used the nominal rate, 4%, rather than the EAR or the periodic rate, $\mathrm{I}_{\mathrm{NOM}} / 2=4 \% / 2=2 \%$, to solve the problems? m. 1. Construct an amortization schedule for a $1,000, 4% annual interest loan with three equal installments. 2. What is the annual interest expense for the borrower and the annual interest income for the lender during Year 2?
QUESTION
Elliott Athletics is trying to determine its optimal capital structure, which now consists of only debt and common equity. The firm does not currently use preferred stock in its capital structure, and it does not plan to do so in the future. Its treasury staff has consulted with investment bankers. On the basis of those discussions, the staff has created the following table showing the firm’s debt cost at different debt levels: $$ \begin{matrix} \text{Debt-to-Capital Ratio }{\left(\mathbf{w}_{\mathbf{d}}\right) } & \text{Equity-to Capital Ratio }{\left(\mathbf{w}_{\mathbf{c}}\right)} & \text{Debt-to-Equity Ratio (D/E)} & \text{Bond Rating} & \text{Before-Tax Cost of Debt }{\left(\mathbf{r}_{\mathrm{d}}\right)}\\ \text{0.0} & \text{1.0} & \text{0.00} & \text{A} & \text{7.0\\%}\\ \text{0.2} & \text{0.8} & \text{0.25} & \text{BBB} & \text{8.0}\\ \text{0.4} & \text{0.6} & \text{0.67} & \text{BB} & \text{10.0}\\ \text{0.6} & \text{0.4} & \text{1.50} & \text{C} & \text{12.0}\\ \text{0.8} & \text{0.2} & \text{4.00} & \text{D} & \text{15.0}\\ \end{matrix} $$ Elliott uses the CAPM to estimate its cost of common equity, rs, and estimates that the risk-free rate is 5%, the market risk premium is 6%, and its tax rate is 40%. Elliott estimates that if it had no debt, its “unlevered” beta, $b_{U}$, would be 1.2. a. What is the firm’s optimal capital structure, and what would be its WACC at the optimal capital structure? b. If Elliott’s managers anticipate that the company’s business risk will increase in the future, what effect would this likely have on the firm’s target capital structure? c. If Congress were to dramatically increase the corporate tax rate, what effect would this likely have on Elliott’s target capital structure? d. Plot a graph of the after-tax cost of debt, the cost of equity, and the WACC versus (1) the debt/capital ratio and (2) the debt/equity ratio.
Other Quizlet sets
Vocabulary Unit 1 words 1-10
18 terms
art history final
20 terms
Newborn Care in 1st Hour
33 terms
In Class ANTH 205 Exam 2 Questions
18 terms
Related questions
QUESTION
Which insurance is known for having a level premium with a fixed rate of return resulting in guaranteed cash value?
QUESTION
At times it is possible for a life insurance agent to affect a savings of premium rates by back-dating an application for life insurance. What is the maximum amount of time that an application may be back dated?
QUESTION
Eric's managed care plan states that he and his family must receive care from an approved network provider. If they receive care from an unapproved provider, what will happen?
QUESTION
The family allowance is a postmortem limited sum of money that is available for the support of a surviving spouse and children during the administration of the decedent's estate.