Which Statement About a Company's Cost of Risk Is (Are)true

question 14

Multiple Choice

Which statement about a company's cost of risk is (are) true?
I.Cost of risk includes insurance premiums and retained losses.
II.Reducing the cost of risk increases profitability.

• A)I only
• B)II only
• C)both I and II
• D)neither I nor II

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Definitions:

Nominal Interest Rate

The stated or face interest rate of a loan or financial product, not adjusted for inflation.

Purchasing Power

The ability of an individual or group to buy goods and services with a given amount of money.

Bank Account

A financial account maintained by a financial institution for a customer, allowing the customer to deposit and withdraw money, and in many cases, earn interest.

Nominal Interest Rates

The interest rates unadjusted for inflation, reflecting the rate of time-preference for current goods over future goods in monetary terms.