In an Ad for Insurance, the Text Reads "Life's an Adventure

question 162

Multiple Choice

In an ad for insurance, the text reads "Life's an adventure, and there are plenty of perils awaiting your jewelry: a lost or broken stone, theft, accidental loss, damage, mysterious disappearance Have you thought about insurance?" How does the inclusion of accidental loss and mysterious disappearance create moral hazard?

• A) Individuals who purchase insurance are risk averse.
• B) Those who seek this jewelry insurance know that tend to lose their jewelry often.
• C) Once insured, some individuals wear their jewelry swimming, exercising, etc. where there is an increased risk of loss.
• D) Individuals who own jewelry know more about their risk than insurance company.

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Definitions:

Auditor Opinions

Formal statements made by an auditor based on an audit of a company's financial statements, indicating the level of reliability of the financial information.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting used in any given jurisdiction, particularly in the United States.

Qualified Opinion

An assessment by an auditor indicating that there were some issues or exceptions found during the audit, but none were significant enough to impact the overall accuracy of the financial statements.

Reportable Segment

A distinguishable business unit or segment of an organization for which separate financial information is available and regularly reviewed by the company's management.