Identify the Element of Insurance That Uses the Law of Large

question 8

Multiple Choice

Identify the element of insurance that uses the law of large numbers to reduce the possibility of missing future loss predictions.

• A)Risk mapping
• B)Risk transfer
• C)Risk severity
• D)Risk acceptance
• E)Risk pooling

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Definitions:

Natural Resource

Materials or substances such as minerals, forests, water, and fertile land that occur in nature and can be used for economic gain.

Straight-Line Method

A depreciation technique that allocates an equal amount of an asset's cost to each year of its useful life.

Commercial Substance

A term used in accounting to indicate that a transaction has caused a change in the economic circumstances of a business.

Future Cash Flows

Estimated amounts of money expected to be received or paid out in the future due to current or planned operations or investments.