All of the Following Statements About the Termination Provisions of the PAP

question 33

Multiple Choice

All of the following statements about the termination provisions of the PAP are true EXCEPT

• A)The insured can cancel the policy for any reason.
• B)The insurer can cancel a newly-written policy if it has been in force for fewer than 60 days.
• C)The insurer can cancel the policy after it has been in force for 60 days only if the insured has three or more traffic violations.
• D)The insurer can refuse to renew the policy at its annual anniversary date as long as proper notice is given prior to the end of the policy period.

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Definitions:

Nominal Interest Rate

The stated interest rate of a loan or investment without adjusting for inflation, representing the surface level cost of borrowing or the raw return on an investment.

Rate of Inflation

The measure of how the general level of prices for goods and services is rising, and, subsequently, how purchasing power is falling over time.

Nominal Interest Rate

The interest rate before adjustments for inflation, representing the raw rate of interest paid on savings or charged on loans.

Real Interest Rate

The rate of interest an investor expects to receive after allowing for inflation, representing the true cost of borrowing and the true yield on investing.