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AveGali [126]
3 years ago
6

Fly-By-Night Insurance Company had much larger losses than forecast. The company did not charge adequate premiums nor did the co

mpany purchase reinsurance. If Fly-By-Night becomes insolvent, which of the following will help pay the unpaid claims of the insurer?
A. guaranty fundB. premium rebatesC. risk-based capitalD. admitted assets
Business
1 answer:
Reika [66]3 years ago
7 0

Answer: (A) Guaranty fund

Explanation:

 According to the given question, the Guaranty fund is one of the type of fund that basically helps in paying the various types of unpaid claims.

This type of funds are basically covering the beneficiaries of the insurance organization in which the insurer are basically helps in selling the various types of products and the services in the market.

 The guaranty funds is typically used by the administrator for the purpose of protecting the policyholder in the insurance firm.

Therefore, Option (A) is correct answer.    

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Hrustic Company issued $750,000 of 12% convertible bonds at face value on an interest payment date several years ago. The face v
mina [271]

Answer: The bondholders decided to convert the bonds into common stock because they believed that getting $2250 today is worth more than $120 interest every year and a $1000 principal payment at the end of the bonds life.

Explanation:

1) In order to find out the number of bonds issued we need to divide 750,000 (Total ) by 1000(Face value of each bond).Total number of bonds issues therefore are 750.

2) A 12 percent convertible bond means that the bond pays a coupon of 120 ( 0.12 * 1000) every year.

3) Each bond is convertible into 25 shares , which means if one bond is converted into common stock, the bond holder can earn $1750. We calculate this number by multiplying the number of shares which is 25 into the current market price of the shares which is 70.

4) Also the company is offering an extra  $500 per bond for converting it which means (500/25) an extra $20 per share.

5) So in total the bondholder by converting a bond and selling the shares he gets by converting it can earn $2250 per bond which they bought for a $1000 and gives them 120$ of interest every year.

6) SO to conclude the bondholders decided to convert the bonds into common stock because they believed that getting $2250 today is worth more than $120 interest every year and a $1000 principal payment at the end of the bonds life.

5 0
3 years ago
How does the Ricardian model differ from the H-O theory in explaining international trade patterns among nations.
svetlana [45]

Answer:For example, the Ricardian model of trade, which incorporates differences in technologies between countries, concludes that everyone benefits from trade, whereas the Heckscher-Ohlin model, which incorporates endowment differences, concludes that there will be winners and losers from trade.

5 0
3 years ago
Value stocks usually exhibit ______ price-to-book ratios and ______ price-to-earnings ratios.A. low; lowB. low; highC. high; low
AysviL [449]

Answer:

A. low; low

Explanation:

Value stocks usually exhibit low price-to-book ratios and low price-to-earnings ratios

3 0
3 years ago
Forecasted depreciation expense, commonly estimated as: [(Current year depreciation expense / Prior year PPE, net) x Current yea
Radda [10]

Answer: True

Explanation:

The Statement of Cash flows is prepared to show the cash transactions of a company and only cash. The effect of anything non cash is not shown.

Depreciation is a non-cash expense which means that it reduces the net income without actually reducing the cash to the company. It would therefore be added back to the cash balance of the company so as to reflect that it did not reduce cash. The addition will be in the operating activities of the Statement of Cashflows.

8 0
3 years ago
For a depository institution, reserves are: liabilities it owes to customers. assets on the balance sheet. borrowings from the c
elixir [45]

Answer:

assets on the balance sheet.

Explanation:

Reserves are percentages of deposits that are required for depository institutions to keep to meet unforeseen contingency. they are usually kept in bank vaults

they are assets and they cannot be lent out

7 0
3 years ago
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