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Which of the Following Statements Regarding the Use of Retention

question 44

Multiple Choice

Which of the following statements regarding the use of retention is (are) true?
I.Retention is best used for loss exposures that have a low frequency and a high severity.
II.A financially strong firm can have a higher retention level than a firm whose financial position is weak.


Definitions:

Equilibrium

A state of balance or stability within a system, where opposing forces or influences are equal and cancel each other out.

Innovation

The introduction or application of new ideas, methods, or products intended to improve efficiency, effectiveness, or competitive advantage.

Complex Solutions

Strategy or answers to problems that are multifaceted and require multifarious approaches for resolution.

Deviation-Amplifying Feedback

A process in systems whereby deviations or changes are amplified rather than corrected, leading to significant changes or transformations.

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