Which of the Following Statements Identifies How Insurance Benefits Society

question 7

Multiple Choice

Which of the following statements identifies how insurance benefits society?

• A)it reduces fear and worry because if a loss occurs,the insurer provides a payment to mitigate the loss.
• B)provides an incentive for loss control because insurance premiums are determined by the chance of loss,and loss control reduces the chance of loss.
• C)helps to facilitate credit by protecting collateral pledged to secure loans.
• D)all of the statements are correct

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Definitions:

Coefficient of Variation

A statistical measure of the dispersion of data points in a data series around the mean, expressed as a percentage.

Expected Returns

The anticipated amount of profit or loss an investment is projected to generate.

Risk Aversion

A preference for lower-risk options over higher-risk ones, often seen in the behavior of investors seeking safer investments.

Security Market Line

A line that represents the relationship between the risk of an investment and its expected return, helping investors to assess the risk-return ratio.