The Major Argument in Favor of an Optional Federal Charter

question 20

Multiple Choice

The major argument in favor of an optional federal charter for insurers is that

• A)small insurers need a national charter to be competitive with large insurer.
• B)a federal charter will prevent insurer insolvencies.
• C)a federal charter will provide greater oversight of insurer market practices.
• D)national insurers are at a competitive disadvantage under the present system.

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Definitions:

Production Costs

Expenses directly associated with the creation of goods or services, including raw materials, direct labor, and manufacturing overhead.

Markup

The amount added to the cost price of goods to cover overhead and profit.

Predetermined Overhead Rate

A rate used to allocate indirect costs to products or services, estimated before the costs are incurred.

Direct Material

Raw materials directly used in the manufacturing of a product, explicitly traceable to the goods being produced.