Which of the Following Statements About the Use of Interest-Adjusted

question 46

Multiple Choice

Which of the following statements about the use of interest-adjusted cost data for comparing life insurance policies is (are) true?
I.Using interest-adjusted cost data provides a more accurate measure of the cost of life insurance than is provided if the time value of money is ignored.
II.Its use is most appropriate in deciding between policies when the cost variation is very small.

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

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Definitions:

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Rational Choice Theory

An economic principle that assumes individuals always make prudent and logical decisions that provide them with the highest amount of personal utility.

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