Which Statement Is Correct Regarding Mutual Life Insurance Companies

question 119

Multiple Choice

Which statement is correct regarding mutual life insurance companies?

• A)Mutual insurance companies have stockholders.
• B)Nearly all mutual companies issue only nonparticipating policies.
• C)Premiums are lower than those offered by stock companies.
• D)Mutual companies do not pay policy dividends.
• E)A mutual company refunds part of the premium to its policyholders.

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Definitions:

Straight Bond Value

The value of a convertible bond if it could not be converted into common stock.

TWX Call Option

An option contract that gives the holder the right, but not the obligation, to buy Time Warner Inc. (TWX) stock at a specified price within a certain time period.

Strike Price

The set price at which an option can be bought or sold when it is exercised.

Intrinsic Value

The actual, fundamental value of an asset, determined through analysis without reference to its market value.