Which of the Following Statements About Captive Insurance Companies Is

question 12

Multiple Choice

Which of the following statements about captive insurance companies is (are) true?
I.A captive insurance company established by a U.S.company must be domiciled in the United States.
II.A captive insurance company may be owned by several parents.

• A)I only
• B)II only
• C)both I and II
• D)neither I nor II

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Definitions:

Dividends in Arrears

Dividends on cumulative preferred stock that have not been declared or paid for the current or previous periods, accumulating until they are paid out.

Cumulative Preferred Stock

A type of preferred stock that entitles its holders to receive dividends that have been missed in previous payments before any dividends can be issued to other types of shareholders.

Participating Preferred Stock

A type of preferred stock that offers dividends that exceed the fixed amount if the company's profits reach predetermined targets.

Stock Appreciation Rights

A type of employee incentive plan based on increases in the price of the company stock over a set period, allowing employees to benefit from the rise in stock price without requiring stock ownership.