Ch 9

Question 1

Common methods in determining the price of a brokerage

Answer 1

Multiple earnings, and multiple commissions

Question 2

What is multiple commissions

Answer 2

Considers only commission income

Question 3

What is multiple earnings

Answer 3

Commissions, trust, fees - income producing abilities

Question 4

Identify the three components of a financial statement

Answer 4

Assets, Liabilities, Shareholders Equity

Question 5

Identify three groupings of assets

Answer 5

Cash
Accounts receivable
Other

Question 6

What are three components of revenue

Answer 6

Commissions
Investment income
Other income

Question 7

Three financial factors to be considered when valuating a brokerage

Answer 7

Cash Flow
Billings
Tax impact

Question 8

What are 3 specific components to the financial management cycle

Answer 8

Budgeting
Classifying Financial Information
Making Comparisons

Question 9

Identify six ways to finance premiums

Answer 9

1 Brokerage financing
2 Financial Institution
3 Insurance company financing
4 Premium finance companies
5 Captive finance companies
6 Cash only

Question 10

Identify 4 means of controlling expenses

Answer 10

Communicating
Identifying areas for cost control
Classifying Costs
Analyzing Expenses

Question 11

5 Common employee incentive plans

Answer 11

1 Bonus Plan
2 Stock Option Plan
3 Performance Plan
4 Deferred Compensation
5 Pension Plan