Edy Obtains a Property Insurance Policy with First Source Insurance

question 12

Multiple Choice

Edy obtains a property insurance policy with First Source Insurance Company for Edy's fishing trawler.First Source can cancel the policy

• A)if Edy appears as a witness in a case against First Source.
• B)if Edy fails to pay the premiums.
• C)if Edy makes changes that add to the trawler's value.
• D)under no circumstances.

---

Definitions:

Bankruptcy Costs

Expenses associated with the process of declaring bankruptcy, including legal, administrative, and direct costs.

Modigliani

Franco Modigliani, an economist known for his work in corporate finance, especially the Modigliani-Miller theorem regarding capital structure and the dividend irrelevance theory.

Miller

Often refers to a person who operates a mill, a machine to grind a cereal crop to make flour.

Risk

The exposure to potential financial loss or gain, often evaluated in decisions involving investment or finance.