JKL Insurance Company reported the following information on its accounting statements last year:
Premiums Written $90,000,000
Loss Adjustment Expenses $5,000,000
Underwriting Expenses $30,000,000
Premiums Earned $100,000,000
Incurred Losses $70,000,000
What was JKL's loss ratio last year?
A) 70.0 percent
B) 75.0 percent
C) 83.3 percent
D) 90.0 percent
Answer: B
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The ____________ method of promotion budgeting takes an investment approach in that goals are set for the upcoming year and then promotional dollars are budgeted to support the achievement of those goals.
A. Objective-and-task method B. Percent-of-sales method C. Desire and action method D. Comparative parity method E. All-you-can-afford method
Susan is a potential investor in MegaCo. Susan learns of a press conference held by MegaCo in which the CEO knowingly states that there are no merger negotiations between MegaCo and another company. As a result, Susan decides not to purchase stock in MegaCo. Three weeks later the public learns that, contrary to what the CEO stated, MegaCo was actually in merger negotiations with another company. The stock price of MegaCo rises as a result, and Susan sues MegaCo for violation of SEC Rule 10b-5. Susan will likely:
a. not win, because the misrepresentation did not occur in connection with the purchase or sale of stock. b. not win, because the CEO of MegaCo did not have a wrongful state of mind when he made the false merger statement. c. not win, because she did not rely on the misstatement. d. prove all elements of her 10b-5 claim