Finance

Which of the following statements concerning social insurance benefits

Which of the following statements concerning social insurance benefits is (are) correct? I. Social insurance benefits are heavily weighted in favor of upper-income groups because of their higher earnings. II. Social insurance benefits are financed entirely or in part by mandatory contributions by covered employers and employees, and not by general revenues of the government. […]

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Date: September 19th, 2020

Ashley opened an all-you-can-eat buffet restaurant. The price per-pers

Ashley opened an all-you-can-eat buffet restaurant. The price per-person was based on what Ashley believed an average restaurant patron would consume. The restaurant began to lose money. Ashley concluded that her patrons had “above average” appetites, and were attracted to her restaurant because they could eat as much as they wanted while being charged an […]

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Date: September 19th, 2020

A group of farmers agreed that if any farmer suffered a property loss,

A group of farmers agreed that if any farmer suffered a property loss, the loss would be spread over the entire group. In this way, each farmer is responsible for the average loss of the group rather than the actual loss that each farmer sustained. Which characteristic of insurance is embodied in this agreement? A) […]

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Date: September 19th, 2020

Adverse selection occurs A) when an insurance company loses money on

Adverse selection occurs A) when an insurance company loses money on its investments. B) when insurance purchasers buy insurance but do not have a loss. C) when catastrophic losses occur as a result of a natural disaster. D) when applicants with a higher-than-average chance of loss seek insurance at standard rates.     ANSWER Answer: […]

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Date: September 19th, 2020

Which of the following statements regarding insurance and hedging is (

Which of the following statements regarding insurance and hedging is (are) true? I. Insurance involves the transfer of an insurable risk while hedging handles risk that is typically uninsurable. II. Insurance transactions can reduce objective risk, while hedging typically involves only risk transfer and not risk reduction. A) I only B) II only C) both […]

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Date: September 19th, 2020

Which of the following statements about the insurance industry as a so

Which of the following statements about the insurance industry as a source of investment funds is (are) true? I. These funds result in a lower cost of capital than would exist in the absence of insurance. II. These funds tend to promote economic growth and full employment. A) I only B) II only C) both […]

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Date: September 19th, 2020

According to the law of large numbers, what should happen as an insura

According to the law of large numbers, what should happen as an insurance company increases the number of loss exposures that it insures? A) Fewer losses should be expected to occur. B) The amount of premiums needed to cover losses should decrease. C) The volatility of the insurance company’s underwriting results should increase. D) The […]

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Date: September 19th, 2020