The Ideal Insurance System

question 57

Multiple Choice

The ideal insurance system:

• A) reduces the probability of accidental and fortuitous losses due to increased predictability
• B) requires the transfer of a large number of exposures to loss to a pool, where a fund exists in advance of losses having to be paid
• C) works best when a large proportion of the participants in the pool submits a claim
• D) eliminates all hazards

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Definitions:

Intangibles

Non-physical assets such as intellectual property, brands, or goodwill that have value for an organization.

Joint Ventures

A strategic alliance where two or more parties come together to undertake a specific business project or activity while sharing risks and rewards.

Business Plan

A formal document detailing a business's goals, strategies, target market, and financial forecasts.

Balanced Portfolio

An investment strategy involving holding a variety of assets classes, such as stocks, bonds, and cash, to reduce risk while aiming to achieve a reasonable return.