Which of the Following Can Be Avoided by Using Experience

question 3

Multiple Choice

Which of the following can be avoided by using experience ratings? (Cost Advantage)

• A)Adverse selection
• B)Medical underwriting
• C)Economies of sales
• D)Insurance pooling

Understand the concepts and calculations of expected monetary value (EMV) and expected opportunity loss (EOL).

Differentiate between states of nature, decision alternatives, and outcomes in decision-making models.

Identify and construct payoff and opportunity loss tables.

Calculate optimum decisions using EMV and EOL criteria.

---

Definitions:

Investment

An asset or item acquired with the goal of generating income or appreciation in value, often involving wealth being used today in the hope of future benefits.

Annual Payments

Regular payments made once a year, often used in the context of loans, annuities, or insurance policies.

APR

Annual Percentage Rate, which represents the annual cost of borrowing or the annual yield from an investment.