Which of the Following Best Defines Insurance? ​

question 9

Multiple Choice

Which of the following best defines insurance? ​

• A)It is a contract whereby a party transfers his right to receive interest to a third-party such as an agent.
• B)It is a contract whereby a party transfers a risk of physical injury to the risk bearer for a fee.
• C)It is a contract whereby a party transfers his right to a claim for a particular fee.
• D)It is a contract whereby a party transfers a risk of financial loss to a risk bearer for a fee.

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Definitions:

Required Rate

The minimum return an investor expects to achieve from an investment, taking into account its risk level.

Internal Rate of Return

A financial metric used to estimate the profitability of potential investments, representing the discount rate that makes the net present value of all cash flows equal to zero.

Managers

Individuals responsible for directing and overseeing the operations and strategic direction of a company or organization.

Practice

The repeated exercise or application of an activity or skill to acquire or maintain proficiency in it.