Property and Casualty Insurers Will Hold Assets of Shorter Maturities

question 55

Multiple Choice

Property and casualty insurers will hold assets of shorter maturities than life insurance companies because:

• A) shorter maturity assets usually have higher returns.
• B) life insurance companies may find they need to get liquid unexpectedly.
• C) property and casualty insurers can find themselves needing to get liquid unexpectedly.
• D) life insurance companies generally take on more risk than property and casualty companies.

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Definitions:

Unrealistic Belief

A conviction or expectation that does not align with actual facts or evidence, often based on incorrect assumptions or misinformation.

Slope

A measure of the steepness, incline, or grade of a line, calculated as the ratio of the vertical change to the horizontal change between two points.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given income and prices.

Expected Return

The average of all possible returns for an investment, weighted by the likelihood of each outcome.