There Are Four Basic Components of an Insurance Premium

question 14

Multiple Choice

There are four basic components of an insurance premium. Which of the following is not one of those components?

• A)losses suffered by the members of the insurance pool
• B)law of large numbers
• C)an allowance for unexpected losses
• D)earnings on investments

Understand the concept of demand characteristics and their impact on research validity.

Understand the concept and impact of eliminating unprofitable segments on net income and fixed expenses.

Comprehend the definitions and applications of cost of capital, hurdle rate, and minimum rate of return.

Analyze the significance and calculation of net present value in investment decisions.

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Definitions:

Breach of Contract

A breach of contract occurs when one party fails to fulfill their obligations under the contract's terms, allowing the other party to seek legal remedies.

Digital Watches

Watches that display the time in numerical digits rather than through dials or hands, often featuring additional electronic functions.

UCC Statute of Frauds

A section under the Uniform Commercial Code that requires certain types of contracts to be in writing to be enforceable, particularly those involving the sale of goods over a certain value.

E-mail

A method of exchanging digital messages over the Internet, using a software application to compose, send, store, and receive messages.