All of the Following Statements About Risk Retention Are True

question 59

Multiple Choice

All of the following statements about risk retention are true EXCEPT

• A)It may be used intentionally if commercial insurance is unavailable.
• B)It may be used passively because of ignorance.
• C)Its use is most appropriate for low-frequency,high-severity types of risks.
• D)Its use results in cost savings if losses are less than the cost of insurance.

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Definitions:

Accounting Standards Codification

The collection and organization of the authoritative accounting and reporting standards for U.S. GAAP (Generally Accepted Accounting Principles).

GAAP

Generally Accepted Accounting Principles; a collection of commonly followed accounting rules and standards for financial reporting in the United States.

FASB

The Financial Accounting Standards Board, which is responsible for establishing and improving standards of financial accounting and reporting for the private sector in the United States.

Higher Risk Securities

Investment products that offer potentially higher returns but come with an increased level of risk, including stocks or bonds from less stable companies.