Which of the Following Statements About Underwriting Standards Is (Are)true

question 43

Multiple Choice

Which of the following statements about underwriting standards is (are) true?
I.One purpose of underwriting standards is to reduce adverse selection against the insurer.
II.Equitable rates should be charged so that each group of policyowners pays its own way in terms of losses and expenses.

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

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Definitions:

Day Trade

The practice of buying and selling financial instruments within the same trading day.

Price-to-earnings Ratios

A valuation metric that compares the market price of a stock to its per-share earnings, used to evaluate if a stock is over or undervalued.

Weak Form

A market efficiency hypothesis that suggests past prices and volumes have no effect on future prices, implying that past market data cannot be used to predict future market movements.

Efficient Market Hypothesis

A theory suggesting that at any given time, securities prices reflect all available information, meaning it's impossible to consistently achieve higher returns.