The Requirement That Losses Should Be Accidental and Unintentional in Order

question 9

Multiple Choice

The requirement that losses should be accidental and unintentional in order to be insurable results in which of the following?
I.Decrease in moral hazard
II.More accurate prediction of future losses

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

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Definitions:

Effective Tax Rate

The average percentage of net income that a person or corporation pays in taxes, effectively showing the portion of income gone to taxes.

Non-Controlling Interest

A minority share of ownership in a subsidiary that is not directly controlled by the parent company, typically reflected in the equity section of the consolidated financial statement.

Consolidated Financial Position

A representation of a parent company and its subsidiaries' financial status as one entity, summarizing assets, liabilities, and equity.

Acquisition Differential

The difference between the purchase price of a company and the fair value of its identifiable net assets at the acquisition date.