Regarding the reduction of the impact of moral hazard by insurers, which of the following is true?
A. The only avenue for insurers seeking to reduce moral hazard is through refusing to insure those who have previously made multiple insurance claims.
B. The only avenue for insurers seeking to reduce moral hazard is through the use of deductibles.
C. It is not possible for insurers to reduce the risk of moral hazard, and this is seen as a risk of doing business.
D. Insurance companies lessen the impact of moral hazard by requiring that individuals with insurance make co-payments or pay a deductible.
E. Insurers refuse to pay claims believed to result from the effects of moral hazard.
Answer: D
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A corporation issues for cash $1,000,000 of 10%, 20-year bonds, interest payable annually, at a time when themarket rate of interest is 12%. The straight-line method is adopted for the amortization of bond discount orpremium. Which of the following statements is true?
a. The amount of the annual interest expense is computed at 10% of the bond carrying amount at the beginningof the year. b. The amount of the annual interest expense gradually decreases over the life of the bonds. c. The amount of unamortized discount decreases from its balance at issuance date to a zero balance atmaturity. d. The bonds will be issued at a premium.
Which of the following scenarios is least conducive to fraud?
a. Outstanding bills at home b. Mandatory vacation time c. Economic downturns d. Moral decay in upper management
In collectivist cultures such as Thailand, accountability is assumed at the group level.
Answer the following statement true (T) or false (F)
The Trans-Pacific Partnership (TPP) is a trade agreement among 12 Pacific Rim countries, including:
A. Great Britain, New Zealand, and China. B. India, Canada, and Australia. C. Peru, the United States, and Vietnam. D. Singapore, Russia, and Chile.