Which of the Following Statements About the Replacement Cost Provision

question 2

Multiple Choice

Which of the following statements about the replacement cost provision of the Homeowners 3 policy is true?

• A)It applies to personal property losses only.
• B)Except for small losses,the insured must repair or replace the damaged property in order to receive full replacement cost.
• C)The insured is required to carry an amount of insurance equal to 100 percent of the replacement value of the insured property.
• D)Loss settlements are equal to 50 percent of the value of the loss if the insured is carrying less than the required amount of insurance.

---

Definitions:

Nominal Exchange Rate

The rate at which one country's currency can be exchanged for another country's currency, not adjusted for inflation.

Real Exchange Rate

The real exchange rate compares the relative price of goods and services between countries, adjusted for differences in price levels.

Nominal Exchange Rate

The rate at which one country's currency can be exchanged for another country's currency.

Real Exchange Rate

An exchange rate that has been adjusted for the relative purchasing power of the two currencies, reflecting the quantity of goods and services one currency can buy in another country.