An Implication of Asymmetric Information in the Insurance Market Is

question 78

Multiple Choice

An implication of asymmetric information in the insurance market is that:

• A)insurance companies have perfect knowledge about the health problems of those who purchase insurance
• B)the price of health insurance may reflect the costs of a healthier-than-average person
• C)people with greater hidden health problems are more likely to buy health insurance than other people
• D)people in average health are encouraged to purchase health insurance

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Definitions:

Principles Of Internal Control

Guidelines and procedures put in place by a company to safeguard its assets, ensure the accuracy and reliability of its accounting records, and promote operational efficiency.

Cash Receipts

The collection of money, including currency, checks, and electronic transfers, by a business during a given period.

Receipts Issued

Documents provided to customers or clients as proof of payment for goods or services received.

Bank Reconciliation

The act of reconciling the amounts in a company's bookkeeping records of a cash account with the related details found on a bank statement.