All of the Following Statements About Class Rating Are True

question 9

Multiple Choice

All of the following statements about class rating are true EXCEPT

• A)Exposures with similar characteristics are placed in the same underwriting class.
• B)The rate charged for each class reflects the average loss experience for that class.
• C)The complexity of class rating makes it inappropriate for personal lines coverages.
• D)It is based on the assumption that future losses to insureds will be determined by the same classification factors currently in use.

Assess the financial feasibility and cost of purchasing indexed annuities with varying compounding rates.

Calculate the rate of interest for a given investment scenario.

Understand the concept of present value and compute it for various contracts.

Apply the concept of future value in different financial contexts.

---

Definitions:

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal, typically over a one-year period.

Investment

The act of spending money with the expectation of obtaining an additional income or profit, often involving financial investments, purchasing assets, or funding new business ventures.

Saving Incentives

Financial or regulatory measures designed to encourage individuals or businesses to save more money.

Interest Rate

This represents the percentage of the principal that lenders charge borrowers for the access to assets.