The Term Adverse Selection Was Originally Used in the Life

question 13

Multiple Choice

The term adverse selection was originally used in the life insurance industry and refers to a situation in which:

• A)those at greatest risk of loss are more likely to insure than others.
• B)information asymmetries exist between buyers and sellers.
• C)risk adverse individuals are more likely to buy insurance.
• D)insurance includes a covenant clause.

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Definitions:

Managerial Levers

Tools or mechanisms used by managers to control, influence, or adjust operations within an organization for optimal performance.

Increase Profitability

Strategies and efforts aimed at enhancing a company's financial gains, often through reducing costs, increasing sales, or improving operational efficiency.

Tailored Postponement

A supply chain strategy where customization of the product is delayed until the latest possible point to better meet customer demand.

Profitability

A measure of the efficiency and financial success of a business, indicated by the ratio of profits generated to the amount invested or revenue.