All of the Following Are Disadvantages of Using Insurance in a Risk

question 40

Multiple Choice

All of the following are disadvantages of using insurance in a risk management program EXCEPT

• A)There is an opportunity cost because premiums must be paid in advance.
• B)Considerable time and effort must be spent selecting and negotiating coverages.
• C)It results in considerable fluctuations in earnings after losses occur.
• D)Attitudes toward loss control may become lax when losses are insured.

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Definitions:

Preferred Stock

Stock that conveys preferences to its holder with respect to assets and dividends.

Subscribers

Individuals or entities that agree to receive and often pay for a service or product regularly.

Unsecured Bond

A type of bond that is not backed by any collateral, making it a riskier investment option compared to secured bonds.

Defective Corporation

A corporation that has not been properly formed due to a failure in fulfilling statutory requirements, yet may still be recognized as a corporation.