An Insurance Company Evaluates Many Numerical Variables About a Person

question 62

Short Answer

An insurance company evaluates many numerical variables about a person before deciding on an appropriate rate for automobile insurance.The number of claims a person has made in the last 3 years is an example of a numerical variable.

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Definitions:

Reserve Requirement

The minimum amount of reserves a bank must hold against deposits, as mandated by central banking authorities.

Commercial Banks

Financial institutions that provide a range of services, including accepting deposits, providing loans, and offering other financial products.

Bank Failures

The occurrence when a bank is unable to meet its obligations to its depositors or other creditors because it has become insolvent or too illiquid to meet its liabilities.

Federal Reserve System

The central bank of the United States, responsible for monetary policy, financial regulation, and stability of the financial system.