A Wants to Buy a Building to Use as a Warehouse.A

question 32

Multiple Choice

A wants to buy a building to use as a warehouse.A has seen the building he wants to buy and knows the purchase price is $500 000.00.A calls his agent and tells him he wants immediate insurance on the building.He gives him all the particulars and tells him to insure the building for $500 000.00,which the agent proceeds to do.After a month of negotiations,A finally enters into an agreement of purchase and sale,and two weeks later he becomes the owner of the building.A half a year later,the building is badly damaged by fire.In this case

• A)A has no coverage under the policy because it is void,since A had no insurable interest in the building at the time the insurance policy was taken.
• B)A has no coverage for damage caused by fire because he did not comply with the disclosure requirements of the insurance company.
• C)A's coverage under the policy began when A became the owner of the building,and the insurance company will pay for the damage to the building.
• D)A's coverage under the policy began when A entered into the agreement of purchase and sale for the building,and the insurance company will pay for the damage to the building.
• E)A's coverage under the policy began when he called his agent,and the insurance company will pay for the damage to the building.

Understand credit risk in the swap market and the limitations thereof.

Understand the essentials of agency theory and the owner-manager relationship, including risk aversion and other agency problems.

Grasp the basics of accounting theories, including normative and positive theories and their development processes.

Identify the types of reasoning used in theory development, such as inductive and deductive reasoning.

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Definitions:

Non-refundable Deposit

A sum of money paid in advance as part of a total payment that is not returned, regardless of whether a service or product is ultimately provided.

Pre-estimate Damages

Pre-estimate damages are compensation amounts agreed upon by parties involved in a contract, to be paid if one party breaches the contract.

Breach of Contract

Occurs when one party fails to fulfill their obligations under a contract, allowing the other party to seek legal remedies.

Breach of Contract

The inability to fulfill any condition of a contract, whether in writing or verbally, without a valid legal reason.