(Consider This) Which of the following statements about insurance and risk is true?
A. Insurance inhibits economic growth and investment by discouraging risk-taking.
B. Insurance transfers risk from those with a high tolerance for risk to those with a low
tolerance for risk.
C. Insurance companies always earn profits because insurance premiums always exceed the
payout for insured events.
D. Insurance transfers risk from those with a low tolerance for risk to those with a higher
tolerance for risk.
Answer: D
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The price elasticity of demand can range between
A) zero and one. B) negative infinity and infinity. C) zero and infinity. D) negative one and one.
Which of the following is the best definition of economics?
a. Economics is the study of how to manage corporations to generate the greatest return on shareholder investment. b. Economics is the study of how to manage city and country government to generate the greatest good to its citizens. c. Economics is the study of how society chooses to allocate its scarce resources. d. Economics is the study of how to track revenues and costs within a business.
Local banks could pass the risk involved in holding mortgage debts on to an investor with a higher risk tolerance using:
A. leveraged investments. B. government-backed securities. C. leveraged securities. D. mortgage-backed securities.
Efforts to fine-tune the economy have been used for several decades, and since then
A. Employment goals have been met, but price stability has not been attained. B. We still experience periods of recession, high unemployment, and inflation. C. We have successfully achieved our major economic goals at all times. D. Price stability goals have been met, but full employment has not been attained.