A Fair Insurance Policy Is One Whose Premium Is _____

question 65

Multiple Choice

A fair insurance policy is one whose premium is _____ the expected value of the claims.

• A)equal to
• B)greater than
• C)less than
• D)unrelated to

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds; it is a non-operating expense shown on the income statement.

Straight-line Amortization

A method of reducing the carrying amount of an intangible asset over a fixed period of time in a systematic and rational manner.

Premium Amortization

The gradual expense or reduction of the premium paid above the par value of a debt security over its remaining term.

Interest Expense

The charge an entity bears for the funds it has borrowed over a set period.