If There Is No Transfer of at Least 10 Percent

question 39

True/False

If there is no transfer of at least 10 percent of the risk, regulators regard the transaction as a noninsurance transaction that has less favorable accounting treatment for losses and taxes.

---

Definitions:

Lending Rate

The interest rate charged by banks on loans extended to clients.

Borrowing Rate

The interest rate that a borrower is charged for the use of borrowed funds, typically expressed as an annual percentage.

Capital Allocation Line

A graph showing risk-return trade-offs of different portfolios, with risk measured on the x-axis and expected return on the y-axis, aiming to optimize portfolio allocation.

Standard Deviation

A statistic that measures the dispersion of a dataset relative to its mean, used in finance to measure the volatility of an investment.